IN THE CON­TRACT, BUT NOW IN LAW

Business Standard - - BUSINESS 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

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