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95 Minn. L. Rev. Headnotes 1 (2010-2011)

handle is hein.journals/headnotpan95 and id is 1 raw text is: Response

In the Shadow of the Omnipresent Claw:
In Response to Professors Cherry & Wong
Michael C. Macchiarolat
As the American economy continues to totter against an
ever-growing populist momentum, it seems likely that claw-
back mechanisms of various sorts will be put to increasing use
in the coming months and years.' Very generally, a clawback
attempts to regain previously conferred monies or benefits fol-
lowing a certain triggering event, usually involving some
change in circumstances. In a sense, clawbacks offer the oppor-
tunity for a do-over -a convenient antidote to both the uncer-
tainty that characterizes American financial markets and the
calls for accountability that grow louder with each corporate
t Distinguished Lecturer, City University of New York. The author
wishes to thank his wife, Jennifer, and his three children, Erin, Maggie and
Brian, for all of their love and support. The author also wishes to thank his
editor, Kara Bovee, for her tireless efforts. Copyright © 2010 by Michael C.
1. See, e.g., Spencer C. Barasch & Sara J. Chesnut, Controversial Uses of
the Clawback Remedy in the Current Financial Crisis, 72 TEX. B.J. 922, 927
(2009) (As governmental entities, court-appointed receivers and trustees, and
corporations continue to react to the financial crisis, aggressive use of claw-
back remedies can be expected.); Alexis Leondis & Margaret Collins, Empty
Clawbacks?, BLOOMBERG BUSINESSWEEK, Jan. 25, 2010, at 20, available at
Business Source Premier, File No. 47601293 (noting that 70 of the top 100 U.S.
companies by revenue have clawback provisions allowing them to recoup reve-
nues from executives); see also Gibson, Dunn & Crutcher LLP, Clawbacks of
Executive Compensation, GIBSON DUNN PUBLICATIONS (Jul. 9, 2008), http://
www. gibsondunn.com/publications/Pages/ClawbacksOfExecutiveCompensation
.aspx [hereinafter Gibson Dunn Memo] ([T]he subject of recouping, or 'claw-
ing back,' executive compensation in the event of financial statement errors is
likely to remain a focal point for boards of directors.). In fact, the trend to-
ward including clawbacks as part of compensation schemes is already well un-
derway. A recent industry report found that [f]rom 2006 to 2009, the preva-
lence of Fortune 100 companies with publicly disclosed clawback policies
increased from 17.6 percent to 72.9 percent. See Press Release, Equilar,
Clawback Policies Get More Clarity in 2009 (Nov. 18, 2009), available at

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