Navigation Links
Pharmaceutical Companies, Investor Coalition Develop Industry Standard-Setting Principles for Recoupment Policies Covering Major Compliance Failures
Date:4/4/2013

DETROIT, April 4, 2013 /PRNewswire/ -- Amgen Inc. (NASDAQ: AMGN), Bristol-Myers Squibb Company (NYSE: BMY), Eli Lilly and Company (NYSE: LLY), Johnson & Johnson (NYSE: JNJ), Merck & Co., Inc. (NYSE: MRK) and Pfizer Inc. (NYSE: PFE) today joined thirteen institutional investors in endorsing a set of principles aimed at deterring violations of health care laws. The principles, Principal Elements of a Leading Recoupment Policy, were jointly developed by the companies and the investor coalition as a best practice corporate governance strategy that seeks to strengthen board risk oversight and preserve long-term shareholder value.

"Properly designed, compensation policies can be effective antidotes to compliance violations by affirming accountability that has real consequences," said Meredith Miller , Chief Corporate Governance Officer, UAW Retiree Medical Benefits Trust.

The members of the working group, facilitated by Johnson & Johnson and the UAW Retiree Medical Benefits Trust, believe that the principles will help deter unethical and inappropriate behavior and that the collaborative process that led to these principles can serve as a model to apply to other corporate-shareholder engagements going forward.  

Many top companies have clawback policies but these policies are only triggered when there is a financial restatement and seek to recover compensation that has already been paid.  The agreed-upon recoupment principles also contemplate the recoupment of compensation that has not yet been awarded or vested.  A 2012 Equilar study of Fortune 100 companies found that while 85% of the companies surveyed had clawback policies, only 25% of these policies contain an ethical misconduct trigger not associated with a financial restatement. 

"We believe these principles strengthen the alignment between shareholders and management by providing potent but balanced disincentives for bad behavior," said New York State Comptroller Thomas P. DiNapoli .

Among the key agreed-upon principles of a company's recoupment policy are:

  • Full discretion of the board compensation committee to determine if a material violation of company policy related to the sale, manufacture or marketing of health care services, has caused significant financial harm to the company and should therefore trigger consideration of a possible recoupment of incentive compensation.  
  • Application of the principles extending beyond the individuals responsible for the compliance failures to potentially include supervisors who failed to appropriately manage or monitor the risk.
  • Decisions by the board compensation committee including whether to "clawback" incentive-based compensation already paid or otherwise recoup or reduce compensation that has not yet vested or has not yet been paid. 
  • Public disclosure concerning decisions to recoup compensation in compliance with SEC rules and, where appropriate, board compensation committees may choose to provide additional information.

The development of these principles was a collaborative effort. Companies in the working group are adapting the principles to suit their compensation programs. 

"These clawback principles give boards a mechanism to hold executives accountable for misconduct and compliance violations, which is especially important in highly regulated industries such as health care," New York City Comptroller John C. Liu said. "Other companies should look to these principles as a model for advancing the highest levels of ethics in the workplace."

Investor participants included the UAW Retiree Medical Benefits Trust, the AFL-CIO Office of Investment, Amalgamated Bank Longview Funds, Connecticut Retirement Plans & Trust Funds, F&C Asset Management UK, HERMES Fund Managers, Illinois State Board of Investment, International Brotherhood of Teamsters, Laborers International Union of North America, New York City Pension Funds, New York State Common Retirement Fund, the United Steelworkers and Wespath Investment Management. The working group was facilitated by Alan L. Beller and Arthur H. Kohn , Partners, Clearly Gottlieb Steen & Hamilton LLP.  Aaron Boyd , Director of Research, Equilar, James Reda , Managing Director, James F. Reda & Associates, and Lynn Shapiro Snyder , Senior Member, Epstein Becker Green, served as subject matter experts.


'/>"/>
SOURCE UAW Retiree Medical Benefits Trust
Copyright©2012 PR Newswire.
All rights reserved

Related medicine technology :

1. Report Presents a Framework for Successful New Oncology Product Launches in the Pharmaceutical Sector
2. Savient Pharmaceuticals to Hold First Quarter 2012 Financial Results Conference Call on Wednesday, May 9, 2012
3. Pharmaceutical Industry Service Company Awarded The UKs Most Prestigious Business Accolade in Recognition of Outstanding Achievement in International Trade
4. Auxilium Pharmaceuticals to Present at the Deutsche Bank 37th Annual Healthcare Conference
5. Simcere Pharmaceutical Group to Announce First Quarter 2012 Financial Results on Wednesday, May 9, 2012
6. Nouveau Life Pharmaceuticals (HRID) Contracts with U.S. Manufacturer to Produce New Female Supplement
7. Thomson Reuters Launches New Mobile Oncology Decision Support Solution for R&D Pharmaceutical Leaders
8. Amgen to Acquire Mustafa Nevzat, a Leading Privately Held Turkish Pharmaceutical Company
9. BioElectronics Survey Indicates a Five-Fold Superior Pain Relief Compared to OTC Pharmaceuticals
10. Icahn Issues Statement Regarding Amylin Pharmaceuticals
11. Almost 50 Percent of the Glaucoma Patient Population Remains Untreated, Signifying a Vast Market for Glaucoma Pharmaceuticals, Finds Frost & Sullivan
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:6/23/2016)... , June 23, 2016 Research ... MEMS Devices Medical Market Analysis 2016 - Forecast to 2022" ... The report contains up to date financial data ... analysis. Assessment of major trends with potential impact on the ... analysis of market segmentation which comprises of sub markets, regional ...
(Date:6/23/2016)... , , , WHEN: ... , , , , LOCATION: , , , Online, with ... , EXPERT PANELISTS:  , , , Frost & Sullivan,s Global Vice ... Senior Industry Analyst, Divyaa Ravishankar and Unmesh Lal, Program Manager , ... industry is witnessing an exceptional era. Several new demand spaces, such ...
(Date:6/23/2016)... June 23, 2016  Guerbet announced today that it ... Supplier Horizon Award . One of 12 ... recognized for its support of Premier members through exceptional ... excellence, and commitment to lower costs. ... recognition of our outstanding customer service from Premier," says ...
Breaking Medicine Technology:
(Date:6/25/2016)... ... June 25, 2016 , ... First Choice Emergency Room , ... Sesan Ogunleye, as the Medical Director of its new Mesquite-Samuell Farm facility. , ... our new Mesquite location,” said Dr. James M. Muzzarelli, Executive Medical Director of First ...
(Date:6/25/2016)... (PRWEB) , ... June 25, 2016 , ... ... athletes and non-athletes recover from injury. Recently, he has implemented orthobiologic procedures as ... City area —Johnson is one of the first doctors to perform the treatment. ...
(Date:6/25/2016)... ... June 25, 2016 , ... Conventional wisdom preaches the benefits of moderation, ... the latter, setting the bar too high can result in disappointment, perhaps even self-loathing. ... toward their goal. , Research from PsychTests.com reveals that behind the ...
(Date:6/24/2016)... ... June 24, 2016 , ... Those who have experienced traumatic events may ... to unhealthy avenues, such as drug or alcohol abuse, as a coping mechanism. To ... for healthy coping following a traumatic event. , Trauma sufferers tend to feel a ...
(Date:6/24/2016)... ... 24, 2016 , ... Marcy was in a crisis. Her son James, eight, was out of ... verbally and physically. , “When something upset him, he couldn’t control his emotions,” remembers Marcy. ... throw rocks at my other children and say he was going to kill them. ...
Breaking Medicine News(10 mins):