2012.08.23 Globally, Banks Claws-back 17% of Bonuses -- per Mercer survey, which starts "New survey data issued by Mercer shows that 14% of global banking organizations have ‘clawed back’ compensation payments made to employees while a further 3% of organisations have reclaimed the payments but have yet to receive the pay back. This recent data comes from Mercer’s Financial Services Executive Compensation Snapshot Survey which looks at compensation structures in 63 global financial services companies, including banks and insurance firms."California:
2011.01.11 Wilmington Trust Claws-back CEO Pay Due to TARP Pay Restrictions -- see Bloomberg; Wilmington Trust's SEC 8-K.
2010.08.30 Deferred Compensation Forfeited -- CA Wage and Unfair Competition Claims Dismissed. Because incentive compensation does not constitute “wages” under California wage protection law unless “all conditions agreed to in advance for earning those wages have been satisfied,” forfeiture of unvested awards was proper where employment terminated before vesting of the awards pursuant to the terms of Merrill Lynch’s Wealthbuilder Plan. For the same reason, the court dismissed claims that the forfeitures violated California’s Unfair Competition Law §§17200 and 16600. But note the court’s dicta that “courts have found violations of Section 16600 when employees forfeit some benefit if they later work for a competitor.” Callan v Merrill Lynch, S.D. CA – summary available here.Connecticut
2013.Jan.29 Claw-back Ordered for Employee's Disclosure of Confidential Information (8th Cir.) In Hallmark Cards v. Murley, the 8th Circuit upheld a jury award under which a former Hallmark employee forfeited all of her severance benefits - $735,000 - due to her disclosure of confidential information to a competitor, in violation of her separation agreement. The court stated: "Hallmark's terms under the separation agreement clearly indicated its priority in preserving confidentiality." This is a healthy reminder to employers to express the purpose behind non-competition and other loyalty-related covenants, because that may form the basis for later employer requests for relief ranging from injunctions to benefit forfeitures.
2010.04.23 Loan Repayment Enforced through Arbitration - Claims by Employees Dismissed. Held, "These plaintiffs all received substantial interest-free advances when they joined Smith Barney. They all promised to repay Smith Barney over terms of years out of their compensation and to repay any unpaid balance if they left the firm "for any reason or no reason." Having left the firm without repaying everything they owed, they bought this baseless lawsuit in what quite plainly was a studied effort to prevent collection of the debts they owed through the arbitration process. As the lawsuit is completely without merit, it amounted to an attempt to use the judicial process for the quite improper purpose of simply stalling CGMI's effort to collect the money it is owed." Banus v. Citigroup Global Markets, Inc., SDNY (Conclusion).Related Links: