29 Clawback as a remedy

A more effective clawback power fits with the pay-for-responsibility concept. In my opinion, it would also be better to link this aspect to an obligation to develop, publish and apply a clawback policy. From this perspective, it should be noted that best practice principle II.2.11 of the 2008 Code already included an incentive for the supervisory board to include a clawback power in the agreement with the executive. As a result of the introduction of Art. 2:135.8 DCC, this provision was also dropped from the 2016 Code. I think that the legal clawback regulation does not alter the fact that a clawback provision in the Code could have added value. This best practice provision would in that case encourage the company to develop a clawback policy as part of the remuneration policy (including specifying certain cases when variable pay can be recovered) and to include a clawback power for the supervisory board in the agreement with the executive. A legal regulation with the same content would be more forceful. Options for consideration would include expanding the clawback power thus ensuring that clawback is not only possible on the grounds of undue payment but also when maintaining the variable pay would be unacceptable on the basis of reasonableness and fairness, for example when it turns out in retrospect that fraud has been committed. In such cases the clawback power – just like the clawback clause in the US – would acquire a punitive character.