Law360, New York (April 19, 2012, 1:45 PM EDT) -- Compensation recoupment policies, or “clawbacks,” are long-standing tools of corporate governance by which companies reclaim compensation previously paid. Traditionally, clawbacks have been used to punish bad behavior by, for example, recovering severance payments upon breach of post-employment restrictive covenants or recouping previously paid compensation due to conduct that is illegal, unethical, or simply against company policy. These “bad-boy” clawbacks are being joined increasingly by clawbacks having financial triggers.
Since 2002, Congress has introduced three separate clawbacks of overlapping and inconsistent scope.
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