Origin of clawbackfrom claw back (see phrase under claw)
- (US law of evidence) A rule that permits a party to take back evidentiary materials that were mistakenly turned over to the other party, but to which the other party would not have been entitled.
- (US taxation law) Money that a party is entitled to keep under one tax provision, but which is taken from them by another tax provision.
- (US, business) Any recovery of a performance-related payment based on discovery that the performance was not genuine.
- The airline got a clawback provision in the event of failure of the engines to meet fuel-consumption targets.
clawback - Investment & Finance Definition
A word used in the venture capital industry to describe a common term found in partnership agreements. A clawback requires venture capitalists to refund fees to their investors if it turns out that the venture capitalists received more than their 20 percent share of a fund’s overall profits. Clawbacks became common in 2002, occurring when a venture capitalist took its 20 percent share of a fund’s early investment success, but the fund later lost money. Clawbacks also are used in other financing contexts, such as private equity.