Clawback and Recovery Policy
This policy establishes the framework for recovering sales compensation payments that were made in error, based on inaccurate data, or where the underlying business transaction has been reversed or cancelled. This policy ensures the Company maintains appropriate financial controls and protects against improper payments while maintaining fairness and transparency with sales team members.
1Purpose & Objectives
This policy establishes the framework for recovering sales compensation payments that were made in error, based on inaccurate data, or where the underlying business transaction has been reversed or cancelled. This policy ensures the Company maintains appropriate financial controls and protects against improper payments while maintaining fairness and transparency with sales team members.
- •Establish clear framework for recovering overpaid compensation
- •Maintain appropriate financial controls and protect against improper payments
- •Ensure fairness and transparency with sales team members
- •Comply with state wage law requirements
- •Provide structured approval authority based on clawback amounts
2Scope
Applies To
- •All sales compensation plans including commissions, bonuses, and incentive payments
- •All sales team members eligible for variable compensation
- •All Company divisions and business units in the United States
- •All clawback situations regardless of the amount (subject to minimum thresholds defined below)
3Definitions
Clawback
The recovery of previously paid sales compensation due to an error, reversal, cancellation, or other qualifying event as defined in this policy.
Gross Profit (GP)
The difference between revenue and cost of goods sold for a transaction.
Material Reversal
A sales transaction reversal that results in a gross profit adjustment exceeding $50,000.
Recovery Period
The timeframe during which the Company may pursue recovery of overpaid compensation, typically not exceeding 24 months from the original payment date.
Triggering Event
An occurrence that initiates the clawback process as defined in Section 4 of this policy.
4Key Provisions
Clawbacks may be initiated when one or more of the following events occur:
Revenue Reversals and Cancellations
When a sales transaction is reversed, cancelled, or returned, resulting in a gross profit adjustment of $50,000 or more.
- •Customer order cancellations after commission payment
- •Product returns that reduce the original transaction value
- •Credit memos issued for quality, pricing, or delivery issues
- •Contract terminations or rescissions
Data or Calculation Errors
When compensation was paid based on incorrect data or miscalculations, including:
- •System errors in commission calculation engines
- •Incorrect crediting or double-crediting of sales
- •Manual processing errors
- •Incorrect application of commission rates or plan rules
Compliance Violations
When compensation was earned through actions that violate company policy or legal requirements:
- •Sales obtained through fraudulent means
- •Violations of company code of conduct
- •Breach of sales crediting policies
- •Conflict of interest violations
Bad Debt and Non-Payment
When customer payment is not received within 180 days of invoice date, or when accounts are written off as uncollectible. Clawback provisions apply when:
- •Invoice remains unpaid after 180 days
- •Account is sent to collections
- •Bad debt reserve is applied
- •Customer enters bankruptcy proceedings
5Compliance References
Federal Laws
- •FLSA (Fair Labor Standards Act)
- •Federal minimum wage requirements
State Laws
- •State wage law deduction requirements
- •State final paycheck laws
- •State consent requirements for deductions