What is Clawback?
A definition of Clawback
“A clawback is the recovery of money already distributed, usually to correct an overpayment or an undeserved remuneration.”
Business Glossary > What is Clawback?
Examples of Clawback in a Sentence:
The bonus was subject to a clawback if performance targets weren’t met.
Many companies implement a clawback policy for their executive bonuses.
The clawback provision allows the company to reclaim funds if errors are found.
Why is Clawback Important in Business?
Understanding clawbacks is essential in financial and legal contexts, as they provide a mechanism to rectify overpayments and ensure accountability in financial transactions. They are widely used in executive compensation and pension plans.
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Associated Terms
Here are some associated business terms and synonyms for “Clawback”:
- Recoupment
- Recovery
- Reclamation
Enron Clawback
In the aftermath of the Enron scandal, the company was required to initiate clawbacks to recover funds from executives who had profited through fraudulent means. This action helped to restore some financial stability and credibility.
Final Notes on Clawback
When businesses consider implementing a clawback provision, they should assess its potential impact on employee morale and reputation.
This has been a definition of Clawback meaning.
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