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What is the purpose of a ‘clawback provision’ in executive compensation contracts?

ATo grant executive stock options at a discounted strike price
BTo allow a company to recover paid incentive bonuses if misconduct or financial misstatement occurs
CTo guarantee an automatic cost-of-living pay increment
DTo provide a guaranteed golden parachute upon retirement

Explanation

Clawback provisions allow corporations to recoup previously paid incentive compensation in cases of fraud or restatements.

Exam Relevance
  • Topic: Compensation & Benefits
  • Subtopic: Executive Compensation
Submitted by: mcqstutor Team More Human Resource Management MCQs →

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