In March 2023, Deputy Attorney General Lisa Monaco and Assistant Attorney General Kenneth Polite of the Criminal Division announced a three-year Pilot Program on Compensation Incentives and Clawbacks. The Pilot Program comprises two components.
First, all DOJ Criminal Division corporate resolutions will include mandates to adopt compliance-related compensation and bonus criteria, such as withholding bonuses from employees who violate laws, and providing “incentives” for employees who “demonstrate full commitment to compliance processes.” Second, in certain circumstances, DOJ will offer a discount against a company's criminal penalty equal to the amount of prior compensation clawed back from non-compliant employees and supervisors.
The Pilot Program was accompanied by revisions to the Criminal Division's Evaluation of Corporate Compliance Programs (ECCP) document, which continues to emphasize that a “hallmark of effective implementation of a compliance program is the establishment of incentives for compliance and disincentives for non-compliance,” and suggests factors by which a company's compensation structures should be assessed.
This article offers practical guidance for companies looking to stay ahead of the curve on the use of compensation mechanisms to incentivize compliance and disincentivize non-compliance. Companies should consider the suggestions below as potential starting points.
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