Clawback contract provisions are required for TARP-covered institutions to recover any incentive compensation paid to top executives that was based on inaccurate financial data.

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A clawback policy allows the company to recover compensation if subsequent review indicates that payments were not calculated accurately or performance goals were not met. TARP-covered institutions are required to implement "clawback" provisions that operate to recover any bonus, retention, or other incentive compensation that was paid to any senior executive officer or any of the next twenty most highly compensated employees of the institution as a result of financial information that is later found to be materially inaccurate.

Clawback Contract Provisions Are Required for TARP-Covered Institutions to Recover