IN THE CONTRACT, BUT NOW IN LAW

What does Section 304 of the Sarbanes-Oxley Act, a US law, say

Authorises the SEC to seek clawback performance-based compensation paid to CEOs, CFOs

The SEC can seek clawback if financial statements were a “result of misconduct”

The legal lacunae

Vulnerable to legal challenge as clawback clause is not part of any legal statute in India

ICICI Banks’s compensation policy on malus and clawback

Compensation aligned to financial and nonfinancial indicators of performance

Gross negligence and integrity breach are under the compensation policy. Errors of judgment aren' t

The bank will prevent vesting of all or part of variable pay in event of an enquiry

If reasonable evidence of deterioration in financial performance found, the bank committee may decide on how to apply malus

Employees will be required to sign clawback agreements for variable pay

In clawback arrangement, the employee will return previously paid variable pay if enquiry determines integrity breach