What is "Excessive Risk"?, plus our Latest Research on CEO Perks - 28 July 2009
From the Equilar CEO Blog - http://www.equilar.com/blog/?p=78
What is "Excessive Risk"?, plus our Latest Research on CEO Perks
Equilar’s latest Compensation Insights newsletter
includes a short article on how companies have gone about defining and
analyzing the potential for excessive risk taking in their executive
compensation programs. In light of the SEC’s recently proposed
compensation disclosure rules, identifying excessive risk is an issue
companies of all sizes are wrestling with. Below is an excerpt from our
latest newsletter:
to even find a definition of excessive risk. With this in mind, our
analysts scanned proxy filings to find interesting examples of
companies that recently made changes to their compensation programs as
a result of analyzing the intersection between risk and compensation.
Our review of recent proxies identified several key questions that
companies have considered as they examine issues of excessive risk.
These questions include:
- Are we over using stock options?
- Do our incentive plans promote short-term thinking?
- Do we have the right mix between short and long-term goals?
- Do large maximum bonus opportunities promote risk taking?
- Are we using overly aggressive performance goals?
- Do our bonus plans focus on too narrow a set of goals?
- Do we have the right mix between fixed and variable compensation?"
In addition to our article on defining excessive risk, the July 2009 Compensation Insights newsletter
includes access to our latest report on CEO benefits and perquisites at
Fortune 100 companies. It shouldn’t come as a surprise that a report on
CEO perks is often one of our most widely read. A copy of the report
can be requested here.
If you are interested in automatically getting updates, subscribe to our executive compensation newsletters by clicking here.
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