30.8—Q-8: What actions are necessary for a TARP recipient to comply with the standards established under section 111(b)(3)(B) of EESA (the “clawback” provision requirement)?
To comply with the standards established under
section 111(b)(3)(B) of EESA, a TARP recipient
must ensure that any bonus payment made to a SEO
or the next twenty most highly compensated
employees during the TARP period is subject to a
provision for recovery or “clawback” by the TARP
recipient if the bonus payment was based on
materially inaccurate financial statements (which
includes, but is not limited to, statements of
earnings, revenues, or gains) or any other
materially inaccurate performance metric criteria.
Whether a financial statement or performance
metric criteria is materially inaccurate depends
on all the facts and circumstances. However, for
this purpose, a financial statement or performance
metric criteria shall be treated as materially
inaccurate with respect to any employee who
knowingly engaged in providing inaccurate
information (including knowingly failing to timely
correct inaccurate information) relating to those
financial statements or performance metrics.
Otherwise, with respect to a performance criteria,
whether the inaccurate measurement of the
performance or inaccurate application of the
performance to the performance criteria is
material depends on whether the actual performance
or accurate application of the actual performance
to the performance criteria is materially
different from the performance required under the
performance criteria or the inaccurate application
of the actual performance to the performance
criteria. The TARP recipient must exercise its
clawback rights except to the extent it
demonstrates that it is unreasonable to do so,
such as, for example, if the expense of enforcing
the rights would exceed the amount recovered. For
the purpose of this section, a bonus payment is
deemed to be made to an individual when the
individual obtains a legally binding right to that
payment.