Corporate Integrity Agreements and C-Suite Clawbacks
So, how much do you know about CIA, when it stands for a Corporate Integrity Agreement. A CIA with serious, C-suite clawback terms is a big part of the recent Glaxo $ 3 billion settlement with the federal government. Lawyers at Nutter Mclennen & Fish provide a cogent education in an online memo. Here’s part of the summary – it’s attention grabbing:
"The Recoupment Program requires GSK to put the equivalent of up to three years of all covered executives’ performance pay at risk of forfeiture. The Recoupment program requires GSK to recover annual performance pay, which includes cash bonuses, stock options, and other incentives, from any executive who individually commits certain bad acts, or should have known of improper conduct by other employees within his/her business unit. The Program applies to C-level executives, vice presidents and senior vice presidents across three levels of GSK’s hierarchy. Even its executives based in the United Kingdom are at risk of losing bonuses and other performance pay. In addition, GSK will defer 10-25% of the executives’ annual performance pay for up to three years and paid on a rolling basis after the deferral period ends. If improper conduct surfaces, however, the deferred performance pay may never be paid and the executive could be reported to the Government. Notably, the Program directs GSK to recoup compensation from its former executives as well, under certain conditions. These provisions appear to have no precedent in prior government settlements."