Phillips & Cohen partner Erika Kelton makes a strong case for clawbacks in her latest article for Forbes.com, in which she analyzes the decision by car-rental giant Hertz to sue former executives for their alleged involvement in financial misconduct.
Hertz’s lawsuit against its former executives is illuminating for its recognition that “the tone at the top” of the company has enormous impact on overall corporate compliance
Hertz’s complaint against its former executives demonstrates the importance of having a C-suite that is committed to meaningful compliance. Corporate culture emanates from the top of the company, and as Hertz found, it can determine whether a company follows or breaks the rules.
More companies should use clawbacks to hold executives accountable for illegal or unethical corporate conduct under their leadership. Clawbacks should not be a rarity. They are among the most effective tools to both enforce and elevate business integrity from the top.