Reported by: LILA MACLELLAN

Last week, U.S. Deputy Attorney General Lisa Monaco outlined the Department of Justice’s plan to increase the number of corporate criminals it prosecutes.

The most forceful way the revised policies will influence corporate behavior is by targeting executive pay structures such as golden parachutes, says Susan Divers, a lawyer and the director of thought leadership at LRN, a legal compliance and ethics consulting company. Often, executives accused of breaking rules have been able to walk away from their employer with large compensation packages. A prime example is ousted Boeing CEO Dennis Muilenburg; although he did not receive severance pay following the 737 Max tragedies, he left Boeing with $62 million in compensation. The DOJ will now reward companies that claw back pay if an executive is involved in wrongdoing.

This is where the rubber meets the road, Divers says. The inability of executives to walk away from companies with large payments may cause them to think twice before behaving unethically, whether that means fudging finances, misleading regulators, accepting bribes, or dabbling in insider trading.

The DOJ will also encourage companies to provide details, like specific names, when reporting a crime to avoid severe repercussions such as fines or a monitor. Individual accountability is now a key focus, Divers says. What’s more, companies won’t be able to use stalling tactics, such as lengthy internal investigations and deferred prosecution agreements, which allow a company to pledge that it will adopt stringent antifraud rules to avoid convictions. As Monaco said in her speech, “gamesmanship with disclosures and productions will not be tolerated.” 

Read full report: https://fortune.com/2022/09/23/doj-tougher-stance-corporate-crime-what-boards-need-to-know/amp/