XYZ Co.took back performance-based compensation of $1.2 million from their CEO because of his decision of the buyout of another firm that eventually lowered the overall value of the XYZ Co.Which of the following compensation agreements allowed the board of directors to take back this $1.2 million?
A)platinum parachutes
B)clawback provisions
C)phantom stock
D)golden parachute

Question

Quizplus · Accepted Answer

Clawback provisions are put in place to allow an organization to recover compensation paid to an employee if certain conditions are met, such as a decline in company performance or unethical behavior. In this case, the CEO's decision to acquire another firm resulted in a decrease in the overall value of the company, which triggered the clawback provision and allowed the organization to take back the $1.2 million in performance-based compensation. Platinum parachutes and golden parachutes are types of severance packages, not compensation agreements. Phantom stock is an equity-based compensation plan.

XYZ CoTook Back Performance-Based Compensation of $1