No one disputes the fact that clawbacks represent good 'optics,'
Dallas, Tx. (Vocus) April 22, 2010
Although many companies see “clawbacks” of bonuses as a way to engender responsible executive benefits, the traditional clawback mechanism has many drawbacks and a carefully crafted nonqualified deferred compensation plan may be a more effective tool, the Technical Resource Group of Clark Consulting, LLC has concluded in a white paper released today.
“No one disputes the fact that clawbacks represent good ‘optics,’” the white paper states. “But do clawback policies really work? Are they really the best tool a corporation has available to it to ensure that the incentive compensation paid is matched by actual performance?”
“That is extremely debatable,” the paper states.
The paper is available at NQDC Deferred Comp and Clawbacks
The white paper examines government required clawbacks and clawbacks prevalent in private firms and concludes by examining the practicality, structure and benefits of “what is perhaps a superior alternative to clawbacks—nonqualified deferred compensation.”
The paper suggests that clawbacks may represent a mere optical solution to a practical problem.
Instead of clawbacks, the paper suggests this approach:
“Since businesses expect practical solutions, a possible answer to the clawback dilemma may lie in the nonqualified deferred compensation (“NQDC”) arena. Subject to appropriate vesting and adjustment, NQDC can serve as a superior alternative to traditional clawback policies: an alternative that can achieve the objective of clawback provisions—recovery of unearned monies—but without the difficulty and costs of collection and without continuously subjecting the company’s executives to anxiety over the use of their incentive compensation.”
A full copy of the white paper can be obtained from your Clark Consulting independent consultant or at http://www.clarkconsulting.com. It is entitled:
Thinking of Adjusting Your Clawbacks?—
Consider Deferred Comp Instead
A Clark Consulting Technical Resource Group White Paper
The white paper was authored by Clark Consulting’s Technical Resource Group, with Troy M. Miller as chief writer, and Robert W. Kaufman and Karen Boney as contributing editors.
Clark Consulting’s Technical Resource Group
Scot I. Billeaudeau, J.D., LLM (Tax)
Karen Boney, J.D.
Todd Figura, J.D.
Marge Hyde, CPA
Robert W. Kaufman, J.D.
Mark Keerbs, J.D.
Troy M. Miller, J.D., LLM (Tax)
Becky Pressgrove, CPA
About Clark Consulting, LLC:
Clark Consulting, LLC, headquartered in Dallas, is an AEGON company. AEGON N.V. is an international life insurance, pension and investment group based in The Hague, The Netherlands, with businesses in over twenty markets in the Americas, Europe and Asia.
Clark Consulting is a leading source of strategic financing solutions such as bank-owned life insurance (BOLI) and corporate-owned life insurance (COLI) for inefficiently funded and unfunded liabilities that result from executive and employee benefit programs.
Since 1967, Clark Consulting has helped place thousands of benefit plans and serves as the record keeper for billions in assets for leading American corporations and banks.
Securities products and services are offered through Clark Securities, Inc., DBA CCFS, Inc., in Texas: 2100 Ross Avenue, Suite 2200, Dallas, TX 75201-7906. Phone: 800.999.3125. Member FINRA and SIPC.
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