In a recent shift toward promoting anti-bribery and corruption measures, the US Department of Justice (DOJ) has been focusing its attention on corporate compensation structures. Central to this development is the DOJ’s use of settlement agreements to highlight its evaluation criteria for assessing compliance programs, an approach that may have ramifications for legal professionals in charge of company compliance worldwide.
As revealed in a recent publication “Show Me the Money: Using Compensation Structures to Promote Compliance“, the DOJ has been increasingly turning to compensation structures as a means of promoting business integrity. Compensation strategies have been harnessed as powerful tools in encouraging ethical operations and guarding against illicit conduct.
The core issue at stake is how companies reward their employees. High-risk compensation arrangements can, unfortunately, encourage unethical behavior as they often incentivize short-term gains at the cost of long-term enterprise sustainability. Now however, corporations will need to provide evidence that their remuneration policies effectively dissuade dishonorable conduct and support the company’s compliance objectives.
An examination of recent settlement agreements paints an interesting picture of the expectations of the DOJ. It is evident that the DOJ is not only evaluating the presence of compliance programs but also examining how effectively they battle corruption.
- Firms must steer clear from incentivizing non-compliance.
- Appropriate financial incentives for personnel should be in place to ensure adherence to compliance programs.
- The DOJ now interprets lack of appropriate compensation strategies to deter misconduct as an indicator of ineffective compliance.
In conclusion, companies and their legal teams should re-evaluate their compensation structures and their role in promoting compliance. Careful planning and implementation of these financial strategies could indeed prove crucial in staying on the right side of the law during this new era of increased regulatory scrutiny.