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After The Restoring American Financial Stability Act (H.R. 4173)

Compensation Committee Action Plan

  • Review the compensation committee charter for sound governance practices.
  • Review the process for determining executive compensation.
  • Conduct an analysis of institutional shareholders to determine which of them follow voting guidelines provided by RMG, Glass Lewis or other proxy advisor firms and which have their own voting guidelines.
  • Start a dialogue with institutional shareholders to solicit feedback on the company’s executive compensation practices.
  • Review the role and independence of the company’s compensation consultant.
  • Consider appointing the head of HR as secretary to the compensation committee to ensure open lines of communication between management and the committee and reinforcing the committee’s overall authority.
  • Review the SEC guidelines issued December 16, 2009, for proxy disclosures.
  • Review RMG’s 2010 compensation policy guidelines for informational purposes.
  • Review the total direct compensation provided to the Named Executive Officers to ensure a connection between pay and performance.
  • Consider conducting a compensation risk assessment.
  • Review the Compensation Discussion & Analysis (CD&A) proxy section to ensure the company is disclosing compensation appropriately and telling the right story.

Related Article:

Few U.S. Companies Prepared for Executive Say-on-Pay Legislation, Survey Finds, SHRM Online Compensation Discipline, July 2010

Related Articles by the Authors:

A Different Say on Executive Pay, Dallas Business Journal, November 2007

Frankly Speaking, Say on Pay Is No Way To Act, Houston Business Journal, June 2007 

Immediate Compliance Changes With New SEC Regulations, Longnecker & Associates, January 2010

 

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