This PwC publication presents our analysis of 2009 through 2012 year-end proxy disclosures for 100 large public companies relative to their compensation recoupment or “clawback” policies. When providing employees with bonuses, stock options, or other incentive awards, companies often establish provisions that allow them to recoup all or a portion of the award under certain circumstances. These provisions, referred to as clawbacks, are detailed by most public companies in their annual proxy statement.
Clawback policies, although not new, have been receiving more attention in recent years. The companies sampled featured a wide range of clawback triggers in their clawback policies, but the most common reason companies seek to clawback is when there is a restatement, either with or without employee involvement, or misconduct. This is not surprising given the Sarbanes-Oxley Act requirements and pending Dodd-Frank-related regulations. However, as further described in this study, we saw many companies developing new types of clawbacks over the last few years, in particular in response to the 2008 credit crisis.