In brief

On 3 March 2023, the Criminal Division of the United States Department of Justice (DOJ) published details of a three-year Pilot Program Regarding Compensation Incentives and Clawbacks ("Compensation Pilot Program"). The Compensation Pilot Program is effective 15 March 2023 and from that date it will be applicable to all corporate criminal matters handled by the DOJ Criminal Division. At the same time, DOJ also updated its Evaluation of Corporate Compliance Programs guidance document to reflect the criteria introduced by the Compensation Pilot Program, among other updates.

Contents

1. Background and objectives of the Compensation Pilot Program
2. Overview of the requirements of the Compensation Pilot Program and its potential reductions in penalties
3. Implications both for companies resolving corporate criminal matters with DOJ . . . and those that are not
4. Practical considerations for implementing Compensation Incentives and Clawbacks into compensation plans
5. Practical considerations for enforcing clawbacks
6. Conclusion

Background and objectives of the Compensation Pilot Program

The concept of incentivizing corporate compliance by structuring compensation programs to reward compliant behaviors and punish non-compliant ones, is nothing new. For example, prior editions of the Evaluation of Corporate Compliance Programs addressed topics including ensuring appropriate incentives for company management and executives to promote good governance and compliance, and expectations...

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