Clawback

This Sunday’s New York Times Business Section featured a front page article: “Sharper Claws for Recovering Executive Pay” that reported how the board of United Health Group forced a clawback of $618 million from the former CEO for backdating stock options. On the same newsstand was the current issue of Fortune Magazine, with the headline, “What Were They Smoking?” with photos of four CEOs whose corporate write-offs (thus far) total $21.9 billion. It doesn’t take a rocket scientist to figure out that the heat is on for boards to address how one can enjoy incentive compensation on the way out while the business is on the way down. The United Health deal may be pivotal because it brings into sharp focus the penalty for performance pay based on ephemeral earnings, prompting boards to institute clawback provisions in executive-employment agreements. What’s your view? Should clawbacks be provided in executive compensation plans–Yes or No? Drop me an email and I’ll report on your feedback next week.   Reply >

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