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November 22, 2021

Better Markets Urges SEC To Adopt Strong Clawback Rule To Force Executives To Return Undeserved Compensation

WASHINGTON, D.C.—Stephen Hall, Better Markets Legal Director and Securities Specialist, released the following statement on the filing of Better Markets’s supplemental comment letter on recovery of erroneously awarded compensation:

“We’re pleased that the SEC is poised to finalize an important rule that will require corporate executives to give back incentive-based compensation that they didn’t deserve. Too often in the lead up to the financial crisis of 2008, executives were engaged in high-risk business strategies and accounting chicanery to beef up revenues and cash in on huge compensation packages. But when those bets failed, shareholders and ultimately U.S. taxpayers were left holding the bag while executives got to keep their huge and undeserved incentive-based compensation.

“The SEC rule was originally proposed in 2015 under Section 954 of the Dodd-Frank Act. It would require the national securities exchanges to establish listing standards under which companies must claw back executive compensation for the past three years when the financial statements of the firm have to be restated due to material mistakes. This important reform serves to limit systemic risk—and the likelihood of future financial crises—by curbing the impulse among executives to pursue short-sighted business and accounting strategies for personal gain. It also vindicates the common sense principle that it is wrong for corporate leaders to retain compensation—especially performance-based compensation—that they do not deserve.

“We’re also gratified to see that the SEC is considering strengthening the rule in several important respects. In our comment letter, we support those changes, arguing that the final rule should close a dangerous loophole in the original proposal by broadening the class of accounting restatements that would trigger clawbacks. We also urge the SEC to minimize board discretion in determining whether an accounting restatement is necessary. Finally, we caution the SEC, as we have so often, against attempting to conduct a quantitative cost-benefit analysis of the rule—a methodology that favors industry and undervalues the enormous public benefits that come with greater corporate accountability.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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