Word: clawbacks
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Dates: during 2010-2019
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Fearing regulation, financial firms are eager to prove they can police their own pay policies. At a recent Washington hearing into the causes of the financial crisis, executives from four top banks all cited recently instituted clawback provisions as evidence the firms had reformed the pay practices that many believe were at the root of the financial crisis. Clawback provisions are at the heart of that effort. While companies have always had the right to sue employees for ill-gotten gains, more firms are adding provisions to reclaim pay not just for illegal behavior, but poor decisions. And they...
...stocks. In late 2008, investment bank UBS instituted such a plan. The executives, however, said forcing banks and other employees to hold on to products they were selling would cause conflicts of interest and limit their ability to do business. Instead, the executives said they instituted so-called clawback provisions, which allow banks to reclaim compensation from bankers who sell products that cause the firm losses down the road. Because of time constraints, the executives were asked to respond to the panel in writing whether clawback provisions have ever been used...