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Glossary Term

Claw-back

Claw-back — definition

Retrieving money paid out in the form of benefits; often included in contracts for incentive-based pay.

What Claw-back means in practice

Clawback Definition:

  • The act of getting back money or benefits that were previously given out.
  • Often occurs under special circumstances or due to contractual clauses.

Common Scenarios for Clawback:

  • Financial Services: Clawback provisions in executive compensation contracts allow companies to reclaim bonuses or stock options if financial statements are found to be inaccurate or if the employee leaves the company soon after receiving the bonus.
  • Government Programs: Certain government benefits or subsidies might be subject to clawback provisions if the recipient fails to meet eligibility criteria or violates program terms.
  • Sales Incentives: Sales commissions or bonuses might be clawed back if the sale is cancelled, returned, or fraudulent.

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