The Conference Board Task Force on Executive Compensation Recommends Corporate Practice Reforms - 22 Sep 2009

The Conference Board Task Force on Executive Compensation Recommends Corporate Practice Reforms

Source: The Conference Board

The Conference Board Task Force on Executive Compensation today issued
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.

…

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; and
  


• Foster transparency with respect to compensation practices and appropriate dialogue between boards and shareholders.

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