Short answer: “Specifically, we are defining “incentive-based compensation” to be “any compensation that is granted, earned, or vested based wholly or in part upon the attainment of any financial reporting measure.”
The final rules define “incentive-based compensation” as “any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a financial reporting measure.” “Financial reporting measures” are defined as “measures that are determined and presented in accordance with the accounting principles used in preparing the issuer’s financial statements, and any measures that are derived wholly or in part from such measures. Stock price and total shareholder return are also financial reporting measures. A financial reporting measure need not be presented within the financial statements or included in a filing with the Commission. As such, any incentive-based compensation recovered under the final rules is compensation that an executive officer would not have been entitled to receive had the financial statements been accurately presented.”