Why do they need a special policy?

Fair Game – Pay It Back if You Didn’t Earn It – NYTimes.com

Skeptical shareholders may well wonder if these new provisions will ever produce an actual clawback. But Mr. Hodgson made note of one that recently occurred. Warnaco Group”>The Warnaco Group, an apparel maker, said in this year’s proxy that its compensation committee had cut the incentive pay for three executives in 2006 by a total of $120,000. The pay cut occurred after the company restated its results for 2005 as a result of accounting errors and irregularities in its menswear division.

I’ve lost count of the friends who have at some point gotten a note from their employer’s personnel department saying that someone had calculated their hours or vacation time or sick leave or pay grade wrong, so could they please have a check for five grand ready by the end of the week. (Or sometimes, “Don’t worry, thanks to the miracle of direct deposit we took the money out of your account already.”) And you’re sure not going to see a company that pays sales reps on commission say, “Oops, we mistyped your sales numbers by a hundred grand last month, but keep the money anyway.” But I guess when it comes to the executive class, collecting a few hundred thousand or a few million that got paid out in error is just too damn much trouble.

Particularly offensive: companies that only consider taking back the bonuses if they can prove that the executives in question cheated to get them. If they cheated, they should give back their bonuses, their base salaries and every cent that uncovering their scheme cost the company. That’s what you do to people who engage in deceit for financial gain. Taking back the performance-based bonus isn’t a punishment, it’s basic equity. If the photo finish shows that your horse didn’t win the race, you don’t get a payoff on your bet, no matter how much the horse might have looked like a winner before. But here it is Two Thousand effing Eight and companies are just thinking about doing one of the most obvious right things on the planet. And they wouldn’t want to move too fast, y’know, because it might hurt executive morale.

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