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The Securities and Exchange Commission has spent time setting out several regulations that focus on board governance, oversight and assurance. Adopting the compensation clawback rule that is the last of the executive compensation regulations required by the Dodd-Frank Act of 2010.
The clawback rule states that if the company is required to prepare a financial restatement and recover the portion of incentive compensation paid to its current or former executives based on any misstated financial measure.
“The rule applies to both corrections of material errors made by restating prior period financial statements as well as corrections of non-material errors that would result in a misstatement if left uncorrected.â€
Sit this rule alongside the SECs proposal for cybersecurity risk management, strategy, governance and incident disclosure. The SEC cyber proposal places a significant burden on boards to oversight, assure and report the cybersecurity of their organisations. Creating risks of material mis-statement.
The SEC cyber proposal sets out many opportunities for boards to oversight and assure cyber through board committees, incident reporting and poor risk management. In addition to cyber incident reporting Boards will be required to declare their cyber expertise, put in place appropriate advisory services, a CISO, declare their cybersecurity risk management framework and policies. All creating opportunities for regulators to examine the statements made by board on behalf of their organisations.
As this article discusses, the final action on the SEC proposal is likely to be announced before April 2023. That if it is passed will create a significant burden for U.S public firms that includes foreign registrants.
Ted Dziekanowski
#cybersecurity #cyberriskmanagement #securitiesandexchangecommission #theaugustagroup
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