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David Martin

David Martin advises corporations and other clients in corporate, corporate governance, securities regulation, and transactional matters. He has led teams of lawyers in corporate finance, business combination and other change of control transactions, including public offerings, spin-offs, proxy contests, and tender offers. He counsels boards, senior executives, and investors in a range of governance policies and procedures. His practice also includes enforcement cases before the U.S. Securities and Exchange Commission (SEC), internal investigations, and corporate compliance issues.

David's career includes seven years of service with the SEC, where he was the Director of the Division of Corporation Finance. In this position, he was the senior executive officer for the agency's program for review of reports of public companies to securities markets and investors. Previously at the SEC, David served as special counsel to the Chairman.

David is a past chair and Senior Advisor of the ABA's Corporate Laws Committee and a Fellow of the American College of Governance Counsel. He also serves on the Advisory Board of the John L. Weinberg Center for Corporate Governance at the University of Delaware and is General Editor for Securities Law Techniques, a treatise published by the Matthew Bender & Company, Inc.

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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