New DOJ Guidance on Executive Compensation, Compliance Programs, and Monitor Selection
In this article, John Davis and Ann Sultan discuss several policy updates announced in March by the Criminal Division of the U.S. Department of Justice (DOJ) that are consistent with the initiatives in the September 2022 memorandum by Deputy Attorney General Lisa Monaco (the Monaco Memorandum). The authors review three policy updates, including a three-year "Compensation Incentives and Clawbacks Pilot Program" that went into effect on March 15, 2023, updated Evaluation of Corporate Compliance Programs guidance, and a "Revised Memorandum on Selection of Monitors in Criminal Division Matters" (the Monitor Memo). They conclude with several critical takeaways:
- DOJ will credit corporate efforts to clawback compensation from executives found to have acted improperly in an investigation. Credit is not guaranteed, and the sometimes-significant fees and costs associated with clawing back are not included.
- DOJ is looking for companies to take concrete steps to tie their compensation programs to compliant behavior.
- DOJ expects companies to implement policies on the use of messaging apps that are "tailored to the corporation's risk profile and specific business needs" but maximize data preservation and accessibility to the greatest extent possible."
- As part of ensuring a compliant data retention program, DOJ expects companies to have trained employees on the applicable policies and to impose consequences for noncompliance.
- Consider the 10 non-exhaustive factors laid out in the Monitor Memo for determining the appropriateness of a monitor in the context of a corporate resolution as part of your internal process for evaluating your compliance program.