This practice note addresses clawbacks or forfeitures of incentive compensation. Clawbacks are a common feature in private and public company incentive compensation arrangements and often appear as clauses within an employment agreement or incentive compensation award or agreement. The clawback is meant to penalize an executive for misbehavior, including activity that has resulted in a misrepresentation of financial statements, on which the amount of incentive compensation was determined. This practice note discusses clawback policies, tax and other considerations, and state law considerations. Two federal laws require certain employers to impose a clawback obligation on their employees: (1) the Sarbanes-Oxley Act of 2002 (SOX) and (2) the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) (see final rules at Release No. 33-11126; 34-96159; 87 Fed. Reg. 73,076 (Nov. 28, 2022)). This practice note does not discuss clawback under these federal laws, but for ...