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SEC Proposes Broadened Rules on Clawback of Incentive-Based Compensation

On July 1, 2015, the Securities and Exchange Commission (the “SEC”) proposed rules (the “Proposed Rules”) that would require any company with securities listed on the New York Stock Exchange, Nasdaq or other national securities exchanges, to have a policy to clawback incentive-based compensation paid to current and former executive officers in the event of a restatement of its financial statements to correct a material error.

The Proposed Rules would affect the majority of issuers with listed securities, including foreign private issuers, smaller reporting companies and emerging growth companies and could require changes in policies and increased disclosures.

Companies may want to review their incentive compensation program for executive officers in light of the Proposed Rules to examine the potential effect of the Proposed Rules on the structure of their incentive compensation programs.

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