Final answer:
The XYZ Co. was able to take back $1.2 million from their CEO due to a clawback provision in the Performance-Based Pay agreement. Such provisions are designed to retrieve compensation in cases of misconduct or harm to the company's value, which happened in XYZ Co.'s case due to a poor acquisition decision.
Step-by-step explanation:
The compensation agreement that allows for the clawback provision, which led to XYZ Co. taking back $1.2 million from their CEO, is d. Performance-Based Pay. This type of compensation is directly related to the performance of the company, and clawback provisions are clauses that enable the company to reclaim bonuses or other performance-based pay after it has been distributed, typically when financial restatements occur or when it becomes clear that the executive's actions harmed the company's value. For instance, after the Wall Street Crash of 1987, performance-based compensation should have ideally been subject to clawback provisions due to the resultant harm to the companies involved. Important to note, the other options listed like Stock Options, Restricted Stock Units (RSUs), and Deferred Compensation can include clawback provisions, but they are typically associated with other types of agreements and conditions.