Executive misconduct and the recovery of compensation

Clawback clauses stipulate that an employee must repay (part of) his variable remuneration if it turns out in retrospect that it should not have been paid out. Prof Dr Michael Erkens, Professor of Corporate Reporting, examined what these clauses must meet to be effective. He also looked at what the consequences were of effective versus ineffective clawbacks. The outcome of the study resulted in the mandatory implementation of effective clawback clauses in the United States.