Free Executive Management Research
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The Conference Board Task Force on Executive Compensation |
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The Conference Board Governance Center established the Task Force on Executive Compensation to provide an independent review of the issues related to executive compensation. The task force’s report and recommendations sets forth Guiding Principles, which it believes, if appropriately implemented, can restore credibility with shareholders and other stakeholders and trust in executive compensation pay processes and oversight.
These Guiding Principles call for assuring the link between pay and performance, adopting best practices, eliminating controversial practices and assuring transparency and an appropriate dialogue between boards and shareholders regarding executive compensation. This FREE report provides guidance to boards, compensation committees and management in implementing these Guiding Principles, and its appendixes contain additional information on executive pay practices and standards.
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Abstract: The Conference Board Task Force on Executive Compensation Recommends Corporate Practice Reforms and Lays Out Five Guiding PrinciplesThe economic crisis and subsequent, unprecedented government intervention, along with much publicized payments to executives of companies with plunging stock prices, has intensified public scrutiny on corporate practices regarding executive compensation.
The Conference Board Task Force on Executive Compensation, which was convened in March 2009, believes public corporations and directors are at a crossroads with respect to executive compensation, and recommends that publicly traded companies take immediate and credible action to restore trust in the ability of boards of directors to oversee executive compensation.
In this report, the Task Force issues recommendations for corporate institutions to restore credibility and increase trust in pay practices and oversight. The Task Force and its report continue the long history of principled leadership by The Conference Board – the global, independent business-membership and research association working in the public interest – and its Governance Center.
A significant regulatory reform debate has begun, and while government has important responsibilities, the Task Force believes that public companies and institutional shareholders also have a role and should take meaningful action to restore the trust that has been lost during the economic crisis.
Convened earlier this year by The Conference Board Governance Center, the Task Force and its Advisory Group are comprised of corporate directors, shareholders, academics, and experts in compensation, governance and law. The full set of guiding principles and recommendations for compensation practices is outlined in this free report.
The Guiding Principles state that public companies should:- Establish a clear link between pay, strategy and performance
- Provide compensation that is fair, affordable and clearly aligned with actual performance
- Eliminate controversial compensation practices that conflict with the notions of fairness and pay for performance – such as excessive golden parachutes, overly generous severance arrangements, gross-ups of parachute payments or perquisites, and golden coffins – unless specific justification exists
- Demonstrate credible board oversight of executive compensation
- Foster transparency with respect to compensation practices and appropriate dialogue between boards and shareholders.
The Task Force encourages public companies to act now to demonstrate their commitment to best practices in executive compensation by adopting the Guiding Principles. A number of corporations have already made this commitment.
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