文档介绍：Corporate Governance and pensation
mittee and pensation Issues
March 20, 2003
Peter Saulnier
pensation is in a State of Flux…
Institutional Investor Activism
NYSE & NASDAQ Listing Requirements
Stock Option Accounting
New . Governance Legislation
Loss of Investor Confidence
Uncertain Economy
pensation
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Some of the Governance Concerns that have been Expressed:
Executive Pay:
Not linked to performance
Escalating ratio of pensation to the pay of other managers, workers
What is a CEO worth?
Executive loans
Stock Options:
Absence of accounting charge has facilitated excess use of options
Equivalent cash value of a stock option to an executive is less than its economic cost to pany
A rising tide floats all boats
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Governance Concerns (Cont’d)
In the Boardroom:
The culture of most Boardrooms makes it easier to go along with Management’s requests than to reject or reduce pensation consultants are usually not independent of management
Improper use/overuse pensation surveys cause a “ratcheting” effect in pensation
mittees lack the experience necessary to plex proposals and to develop informed opinions, pro or con
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Meanwhile, Company CEOs also Have Concerns
Impact of new legislation and standards on governance and day-to-day operations
Articulating corporate strategy in shareholder terms, with more Board involvement
Achievement of financial results in an uncertain environment
Shortened careers—produce or else
Attraction, motivation and retention of key executive talent
pensation vs. equity incentives
Other issues: ession, etc.
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Shareholder Objectives for pensation
Build real long-term growth in shareholder petitive, performance-pensation
Avoid corporate future financial hardship as a result of pensation arrangements
Pricing relative to the market—proper use pensation instruments
Truly mittees
Full, truthful and straightforward disclosure of
The principles and structures of pensation systems (., no “boiler plate”)
Decision-making process for curr