What is a clawback?
Just ask some of the top executives at Entercom Communications.
Five company C-Suiters signed an agreement acknowledging a new clawback policy — formerly known as an Incentive Compensation Repayment Policy — Entercom’s board approved on Tuesday (10/22).
On May 15, Entercom made an SEC filing following its annual shareholder meeting that noted that in 2019 it would implement a compensation “clawback” policy that will cover its named executive officers.
It’s something that has become more common following the severe economic downturn of the late 2000s. In short, a provision in placed in an employee’s contract that states money already paid to an employee may have to be returned to the employer.
This is mainly focused on incentive-based payments, such as a bonus, and were designed to protect investors — and prevent big paydays for executives in poor economic times — as a show of goodwill.
Stock ownership guidelines were approved along with the clawback policy. This means President/CEO David Field will be required to hold shares having a total value equal to at least six times his base salary.
Other named executive offices will be required to hold shares having a total value equal to at least two times their base salary.
Those bound by the new policy, along with Field, are Entercom CFO Rich Schmaeling, COO Weezie Kramer, Chief Revenue Officer Robert Philips and EVP/General Counsel Andrew Sutor.
— Reporting by Rob Dumke