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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...
While compensation consultants say clawbacks are a nice idea, they are very hard to execute. Getting employees to return paychecks that they have already cashed, spent and paid taxes on can be tricky. And most policies are not specific enough as to when pay can be recovered. That, employment lawyers say, can lead to abuse of the policies by the companies. "No question this is going to lead to a lot of litigation," says Michael Deutsch of law firm Singer Deutsch. "Clawbacks are unwieldy and can subject employees to abuse...
...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, not limiting it. That's because traders may do whatever they...
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...