SEC proposes rule to take back executive pay for accounting errors

NEWYou can now listen to Fox News articles!

The Securities and Exchange Commission voted Wednesday to propose a rule that would claw back compensation for executives who were awarded performance-based compensation that was later found to be based on accounting misstatements.

The commission voted 3-2 for the proposed rule, which is one of several executive pay rules required by the 2010 Dodd-Frank financial reform law.

"These listing standards will require executive officers to return incentive-based compensation that was not earned," SEC Chairwoman Mary Jo White said. "The proposed rules would result in increased accountability and greater focus on the quality of financial reporting, which will benefit investors and the markets."

The rule, which applies to both current and former executives, would require companies listed on exchanges to develop rules for clawbacks in case executives receive payment that a later restatement of income indicates they shouldn't have received.