Top 10 Compensation Committee Agenda Items for 2010

As Compensation Committees reconsider executive pay programs - including many long regarded as best practices - they confront changing perspectives on how corporate leaders should be rewarded. They must balance public demands to curb perceived abuses with a view toward how program cutbacks may affect the retention of top performers. New executive pay structures must not only be appropriate and effective, but effectively communicated to investors when detailed in proxy disclosures.

These will be ongoing challenges long after the economy and investor portfolios have fully recovered. In the short run, Committees must be able to target and prioritize their own companies' most critical needs and commit the appropriate time and resources to addressing those issues.

In that context, Pearl Meyer & Partners' annual look at the Top 10 executive pay and governance issues provides approaches to the most pressing items on the plates of Compensation Committees in 2010:

• Revisit Your Executive Compensation Strategy and Philosophy
• Address Possible "Red Flag" Compensation Practices
• Validate and, Where Needed, Strengthen Pay-for-Performance Relationships
• Expand Assessment of Compensation-Related Risk
• Review Long-Term Incentive Program Design
• Adopt an Enforceable Clawback Policy
• Reconsider the Need for Employment Contracts and Severance Agreements
• Improve Proxy Disclosure in Preparation for "Say on Pay"
• Create a More Rigorous CEO Evaluation Process
• Evaluate the Adequacy and Independence of Compensation Advice