DOJ’s Pilot Program on Clawbacks to Foster Individual Accountability Poses Challenges for Companies

The DOJ Criminal Division’s new pilot program on compensation incentives and clawbacks is intended both to increase personal accountability and inspire organizations to be more proactive in fostering compliance via compensation. The pilot is meant to “encourage companies who do not already factor compliance into compensation to retool their programs and get ahead of the curve,” said Deputy Attorney General Lisa Monaco when she announced the program in a speech on March 3. The three-year program, which became effective on March 15, requires companies to implement compliance-related criteria into their compensation and bonus systems when entering into criminal resolutions. The program also provides for possible fine reductions if corporations claw back compensation from culpable employees and those who had supervisory authority over them or who were “willfully blind” to the misconduct. Yet some defense counsel foresee potential roadblocks that might impede the pilot program’s effectiveness. See “2022 FCPA Year in Review: Clawbacks, Messaging Apps and More Enforcement to Come” (Dec. 21, 2022) and “Revised Monaco Memo Affects Compensation, Clawbacks and Monitorships” (Oct. 26, 2022).

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