On March 2, 2023, Deputy Attorney General (DAG) Lisa Monaco announced a new Criminal Division policy for Department of Justice (DOJ) prosecutors to consider the implementation of compensation clawback policies as an important factor in corporate criminal resolutions. This policy is aimed at incentivizing both public and private companies to incorporate clawback clauses into contracts and compensation policies for employees, officers and directors.

As a result, companies may want to consider their response to the new DOJ policy in risk management and compliance planning, and coordinate with human resources, outside counsel and boards of directors to plan the process of updating agreements and policies. State-level and, where relevant, non-U.S. employment laws can create challenges and even impediments to the clawback policies envisioned by the DOJ, requiring a careful assessment depending on the location of companies and key executives/directors.

Further, in the event of potential criminal activity, companies and their counsel will need to have a clear understanding of executive compensation policies, and how they function within the bounds of state and non-U.S. employment law, when approaching federal prosecutors for settlement discussions.

DOJ Clawback Policy

The new Criminal Division clawback policy announced by DAG Monaco was expanded upon by Assistant Attorney General (AAG) Kenneth Polite on March 3, 2023. It is designed to shift the burden of corporate wrongdoing away...

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