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Clawback Provisions in Agreements

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Definition:

A clawback provision in an agreement is a provision that requires something to be given back, depending on the circumstances.

Examples of clawback provisions:

  • In executive pay agreements, a clawback provision might require the executive to reimburse the company specified amounts if the executive breaches a non-compete agreementand goes to work for a competitor within a certain number of months after leaving the company.

  • Executives of a company may also be required to return stock options exercised or bonuses if the corporation's earnings do not meet specified levels.

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