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David H. Engvall

David Engvall advises public companies on a wide range of securities, capital markets, corporate governance, and related matters. In the capital markets area, he has handled a range of transactions, including registered and unregistered offerings of common and preferred stock, investment grade and high yield debt securities, convertible securities, and trust units. He advises companies in a number of industries. David’s transactional experience also includes equity and debt tender offers, investments and M&A transactions.

David advises public company clients on a wide variety of disclosure, SEC compliance, transactional, and corporate governance matters. David is actively engaged in advising clients on a wide range of specific securities law topics, including executive compensation, beneficial ownership reporting, environmental, social and governance (“ESG”) reporting, and specialized disclosures such as those pertaining to conflict minerals. In the corporate governance area, he advises clients on topics such as Board committee charters, shareholder activism, management succession planning, and director independence.

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On February 22, 2023, the New York Stock Exchange (“NYSE”) and the Nasdaq Stock Market (“Nasdaq”) filed rule proposals[1] to adopt new listing standards implementing Rule 10D-1 under the Securities Exchange Act of 1934. That rule, which the Securities and Exchange Commission (the “SEC”) adopted in October 2022, requires national securities exchanges to implement standards to require listed companies to adopt and publicly file so-called “clawback” policies to recover erroneously awarded incentive-based compensation following accounting restatements. Rule 10D-1, which was first proposed in 2015 and re-opened for comment twice, implements Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The proposed listing standards are subject to a 21-day comment period once published in the Federal Register before the SEC can approve them, and must, in any event, become effective by November 28, 2023. Listed companies will be required to adopt clawback policies that comply with the new standards within 60 days of the effective date of the applicable listing standards (the “Adoption Deadline”).

The listing standards proposed by both NYSE and Nasdaq are materially consistent with Rule 10D-1 and its adopting release. Among other things, both proposed listing standards provide for the commencement of delisting proceedings for listed companies that fail to either adopt a compliant clawback policy or comply with such policy after a clawback obligation arises. These delisting provisions are discussed below, and, for an in-depth discussion of Rule 10D-1’s requirements, please refer to our previous alert.

NYSE – Delisting for Noncompliance

Failure to Adopt a Policy: As proposed, a company listed on NYSE that fails to adopt a compliant clawback policy by the Adoption Deadline will have five days to notify NYSE, after which the exchange will send a written delinquency notification to the company. Upon receipt of this notification, the company would have five days to contact NYSE to discuss the delinquency and to issue a press release disclosing the company’s delinquency, the reason for the delinquency and, if known, the anticipated date on which a clawback policy will be adopted. If the company fails to issue such a press release in time, NYSE will issue a press release stating that the company has received a delinquency notice.Continue Reading NYSE and Nasdaq Propose Clawback Listing Standards

On October 26, 2022, the Securities and Exchange Commission (the “SEC”) adopted a long-awaited rule[1] that will require listed companies to adopt and publicly file so-called “clawback” policies to recover erroneously awarded incentive-based compensation following accounting restatements. Companies with securities listed on national securities exchanges, including NYSE and Nasdaq, will be required to implement such policies within 60 days of the effective date of new listing standards, which the exchanges must adopt within 12 months of the new rule’s publication in the Federal Register. Companies who fail to comply will be subject to delisting.

The most significant deviation from the SEC’s initial proposal of the clawback rule in 2015 is that Rule 10D-1 will require companies to conduct a clawback analysis not only for “Big R” accounting restatements, which must be disclosed under Item 4.02(a) of Form 8-K, but also for “little r” accounting restatements, which involve the correction of errors in prior period financial statements when those financial statements are included in a current period filing.

Clawback Policy Requirements

Under the new rule, a listed company’s clawback policy must require the company to recover, reasonably promptly, erroneously awarded incentive-based compensation from persons who served as an executive officer at any time during the performance period for such incentive-based compensation and who received such compensation during the three fiscal years preceding the date on which the company is required to prepare an accounting restatement. The compensation to be recovered is the amount in excess of what would have been paid based on the restated results.Continue Reading SEC Requires Clawback Policy

On February 21, 2018, the U.S. Securities and Exchange Commission (the “Commission”) approved a statement and interpretive guidance that provides the Commission’s views on a public company’s disclosure obligations concerning cybersecurity risks and incidents (the “2018 Commission Guidance”). This guidance reinforces and expands upon previous cybersecurity disclosure guidance issued by …
Continue Reading SEC Adopts New Guidance on Public Company Cybersecurity Disclosures and Insider Trading

In a so-called “trilogue” meeting on June 16, the European Parliament, the Council of Ministers, and the European Commission reached a “political” agreement on the key elements of a regulation that would implement a due diligence and reporting regime for conflict minerals imported in the EU.

It has taken more…
Continue Reading Agreement in principle announced for an EU regime on conflict minerals