Word: clawbacks
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...Clawbacks are catching on in other industries. A recent study by executive compensation research firm Equilar found that nearly 73% of Fortune 100 companies now had clawback provisions in their executive pay packages, up from just under...
...order to get around the repayment problem, a number of firms say their clawbacks will only apply to deferred compensation and not immediate cash payments. At Morgan Stanley, for instance, the firm's clawback provision only applies to the portion of their employees' compensation that is paid in deferred cash, which for most employees is only about a third of their pay. The other two-thirds of the firm's employees' compensation, paid out in cash and restricted stock, are not subject to the clawback provision. But in limiting the repayment provisions, Morgan Stanley might actually be promoting risky behavior...
Adding to the uncertainty is the fact that firms have adopted different structures for the clawback provisions. The differences in the plans - including such details as what employees are covered and which specific portions of compensation are subject to clawback - make it tough to know which features are most effective in getting employees to be more careful...
Citigroup's clawback only applies to its top executives, or about 200 of the company's 250,000 employees. And it only requires employees to return pay in instances when they have broken either the law or firm policies. Bad trades are exempt. But unlike other firms, Citigroup's clawback covers all types of pay, including cash or vested stock...
...Bank of America, the clawback covers all the employees of the bank that are involved in investment banking and trading, or roughly 9,000 employees. Top executives, for now, are excluded. Only the employees' deferred compensation is subject to the clawback, which is about three-quarters of pay for most executives. And once employees have received the pay, which vests over three years, it is theirs to keep for good...