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Title 15, Commerce and TradeRelease 119-73not60

§78j–4 Recovery of Erroneously Awarded Compensation Policy

Title 15 › Chapter 2B— SECURITIES EXCHANGES › § 78j–4

Last updated Apr 3, 2026|Official source

Summary

The Commission must make rules that force national stock exchanges and associations to bar a company’s securities from being listed if the company does not follow these rules. The rules must make each company write and follow a policy that says how it handles incentive pay tied to reported financial numbers and that it will get back any excess incentive pay, including stock options, paid to current or former executives based on wrong data during the 3-year period before the company had to correct its financial reports.

Full Legal Text

Title 15, §78j–4

Commerce and Trade, Source: USLM XML via OLRC

(a)The Commission shall, by rule, direct the national securities exchanges and national securities associations to prohibit the listing of any security of an issuer that does not comply with the requirements of this section.
(b)The rules of the Commission under subsection (a) shall require each issuer to develop and implement a policy providing—
(1)for disclosure of the policy of the issuer on incentive-based compensation that is based on financial information required to be reported under the securities laws; and
(2)that, in the event that the issuer is required to prepare an accounting restatement due to the material noncompliance of the issuer with any financial reporting requirement under the securities laws, the issuer will recover from any current or former executive officer of the issuer who received incentive-based compensation (including stock options awarded as compensation) during the 3-year period preceding the date on which the issuer is required to prepare an accounting restatement, based on the erroneous data, in 11 So in original. Probably should be “compensation in”. excess of what would have been paid to the executive officer under the accounting restatement.

Legislative History

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of Title 12, Banks and Banking.

Reference

Citations & Metadata

Citation

15 U.S.C. § 78j–4

Title 15, Commerce and Trade

Last Updated

Apr 3, 2026

Release point: 119-73not60