Clawback Clause
A provision that allows a party to reclaim money or benefits given out, typically used in executive compensation or earnout agreements.
Implications
A provision in a contract that allows one party to reclaim money or benefits previously granted if certain conditions are not met, often used in executive compensation, mergers, and financial transactions to protect against risks and ensure compliance.
Example
Example: A company includes a clawback clause in its CEO�s compensation package, allowing it to recover bonuses if the executive is found guilty of misconduct or if the company�s financial performance is later restated.
Related Terms
Different from standard contract provisions, clawback clauses specifically address the recovery of funds or benefits if certain conditions are violated or not fulfilled.
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