'To-do' list for board compensation committees. (Business Briefs).Bruce Ellig, author of The Complete Guide to Executive Compensation, has 10 suggestions for compensation committees: 1. The responsibilities of the compensation committee will be put in writing and approved by the board of directors. 2. Only those who are truly disinterested Free from bias, prejudice, or partiality. A disinterested witness is one who has no interest in the case at bar, or matter in issue, and is legally competent to give testimony. persons will be members of the committee. 3. The committee will define the pay philosophy for the CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and other "proxy-named executives" -- salary, annual incentive, long-term incentives and executive benefits (perks perk 1 v. perked, perk·ing, perks v.intr. 1. To stick up or jut out: dogs' ears that perk. 2. To carry oneself in a lively and jaunty manner. ) -- in terms of the company's competitive performance. 4. The committee will establish the calendar of what actions will be reviewed at what meeting, as well as specify all of the parties to be involved. 5. An outside compensation expert will be selected by the committee to work with management, but who will report to the committee. 6. The board's performance expectations for the CEO for the coming year will be concretely defined by the committee, along with reward payments that will accompany that performance, and will be communicated face-to-face to the CEO. 7. Year-end performance (with resulting pay actions) will be communicated face-to-face to the CEO, but not before the audit committee has attested at·test v. at·test·ed, at·test·ing, at·tests v.tr. 1. To affirm to be correct, true, or genuine: The date of the painting was attested by the appraiser. 2. to the validity of the performance numbers. 8. Before employment contracts are validated, the committee will assure that "clawback Clawback 1. Previously given monies or benefits that are taken back due to specially arising circumstances. 2. A retraction of stock prices or of the market in general. Notes: 1. " clauses, as well as conditions and amounts of severance pay Severance Pay Compensation that an employer gives to someone who is about to lose their job. Notes: Severance pay is not always paid to employees. It depends on the situation in which the employee is losing their job and whether legislation requires severance to be paid. are clearly defined. 9. The impact of expensing stock options will be carefully examined, including "tandem options" and "performance share stock awards." 10. The committee will set an example of awarding very limited perks to officers by identifying those (if any) available to board members. |
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