Sweeping Executive Compensation Reforms Explored

Summary:

Upcoming regulatory activity regarding executive compensation is promising to be a game changer with respect to how companies, boards and compensation committees create and implement executive compensation packages and how they report them in their proxy disclosures. Much of this heightened regulatory activity is the result of the recent economic crisis bringing to light what many see as egregiously lucrative pay packages for companies that have either failed or needed government bailouts to survive. One thing’s for sure: Congress now has the ammunition to “lock on” and reign in executive compensation packages and practices.

This live webcast chaired by a panel of key thought leaders and compensation experts will cover the most critical issues with respect to the upcoming legislation including the role of Compensation Committees and their impact on bonuses and incentives, developing incentives & goals for 2010, compensation plans and risk management, Say on Pay, other issues in the general economy that might affect compensation planning, H.R. 3269 (The Corporate and Financial Institution and Compensation Bill of 2009), which targets so called “golden parachutes” for executives, leaving companies and finally up to the minute regulatory updates.

Supporters and critics have lined up on both sides of the pending legislation. Some contend that it will drive capital away from US markets making them less competitive while others hail it as a bold step in reining in runaway executive compensation packages. What’s most important to understand is that your firm must act now to in order to be ahead of the curve for 2010. And while the legislation initially mainly affects large institutions, all companies should be aware of the laws as they will create a new paradigm which will likely be the model for future compensation packages for all companies. Read between the lines: “Executive compensation reform coming soon to a company near you….”

The Knowledge Group is assembling a panel of key thought leaders and experts to help you understand Executive Compensation reform and its impact on your firm. This two-hour webinar is a must see for all professionals and companies who need to be in the know with respect to Executive Compensation Reform. The time to act is now as it’s a near certainty that sweeping reforms are on the horizon.

Course Level: Intermediate
Prerequisite: None
Method Of Presentation: Group-Based-Internet
Developer: The Knowledge Conference
Recommended CLE/CPE Hours: 2.0
Important Note: Your State Bar or Accounting Board will make the final determination with respect to continuing education credit. If you are applying for CLE credit in Texas you must register 20 days before the event date or you will not be able to obtain CLE credit.
Advance Preparation: Print and review course materials
Course Code: 093891

SEGMENT 1:

Mark A. Borges, Principal,  Compensia

SEC’s Proxy Disclosure Rule Changes

1. Compensation and Risk. Although the SEC may scale back its proposal requiring companies to address in the Compensation Discussion and Analysis the relationship between their programs for compensating their employees (including non-executive officers) and their risk management practices and risk-taking incentives, if the risks arising from these programs may have a material impact, the net result of this proposal is that companies should be conducting an annual compensation-related risk assessment and ensuring that their compensation programs contain effective risk-mitigation features.

2. Equity Award Reporting. While the SEC’s proposal to change the way equity awards are reported in the Summary Compensation Table and Director Compensation Table will be welcome by companies and investors alike, companies will still need to consider how best to report performance-based equity awards, where the amounts ultimately earned by the named executive officers are likely to be less than the amounts required to be reported for disclosure purposes.

3. Compensation Consultant Conflicts. Although the SEC proposal concerning executive compensation consultants will only require fee disclosure in the event that a consultant also provides “other services” to a company, in the interests of transparency, every company should consider disclosing the amount that is paid to the compensation consultant that advises the board compensation committee in its Compensation Discussion and Analysis.

4. Director and Director-Nominee Qualifications. While this proposed requirement may put pressure on companies to identify and recruit directors who have specific skills and experience related to their business (as well as the board committees on which they will be expected to serve), they should continue to recruit and appoint individuals with strong analytical skills (and common sense) to serve on their boards even if they don’t have specific expertise and, thus, the discussion of their qualifications will be largely subjective in nature.

5. Leadership Structure. Notwithstanding the SEC’s statements to the contrary, the proposal to provide investors with information on why a company has selected its specific leadership structure will have the effect of highlighting companies where a single individual serve as both chief executive officer and chairman of the board of directors and make it easier for investors to exert pressure to abandon these arrangements.

SEGMENT 2:

James D. C. Barrall, Partner,  Latham & Watkins

- What is Say on Pay and what is its history in the US
- What is the status of the legislative proposals that would require US companies to allow shareholders to vote on pay
- What have been the outcome of say on pay votes in 2009
- How will the enactment of mandatory say on pay affect companies, Boards and compensation plans
- Consideration of various forms of say on pay votes: annual, biennial (a la Prudential) and triennial (ala Microsoft)

SEGMENT 3:

J. Henry Oehmann III, Director, National Executive Compensation Services,  Grant Thornton LLP

The global financial crisis and the down economy have had a devastating effect on Board’s and management’s freedom and flexibility to implement executive compensation. With the introduction of the TARP in 2008 and the enactment of American Recovery and Reinvestment Act of 2009, how executive compensation plans are design and how pay is delivered has become subject to greater scrutiny and restraints. In this session, we will introduce the new TARP plan design constraints, structures, prohibitions, and limitations in order to better understand how Congress and Federal regulators expect executive pay to be structured in the future. We will also cover some of the international response such as how the Malus Plan works, what are the compensation principles proposed by Financial Stability Forum, what are the implications of the Walker Report and what the FSA expects from its efforts to reform remuneration practices. Terms like clawbacks, withholds, asymmetrical compensation arrangements are becoming the buzzwords to describe how plans must be structured. The future of executive compensation will be characterized by even greater public scrutiny, braoder intrusion by governments and regulators and greater oversight by boards and shareholders. In this session, we will discuss the salient factors envisioned by these changes and explore how to prepare for the future.

SEGMENT 4:

Pearl Meyer, Senior Managing Director,  Steven Hall & Partners

- Changing Time
    - Period of extraordinary legislative and regulatory activity to “reform” executive compensation and governance
    - Legislative and Regulatory Proposal – All Public Corporations
    - Predicted Outcome
- Emergence of Activist Compensation Committee
- Pay Trends

SEGMENT 5:

Thomas Quaadman, Executive Director for Reporting Policy and Investor Opportunity/em>,  U.S. Chamber Center for Capital Markets Competitiveness

** Speaker Agenda to be added soon.. **

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Who Should Attend?

- Human Resources & Benefits Executives
- CFOs & Financial Teams from Companies
- Employee Benefits and Executive Compensation Practicing Lawyers
- Compensation and Benefits Consultants

Why Attend?

This is a must attend event for anyone interested in understanding of Executive Compensation Reform.
- New guidance explained by the most qualified key leaders & experts
- Hear directly from key regulators & thought leaders
- Interact directly with panel during Q&A