Top 10 Executive Compensation Issues in the New Economy

Compensation Committees have entered virtually unknown territory. Historically, pay programs for senior executives have always drawn fire when the economy goes into a slump. But the worldwide financial meltdown has fueled an unprecedented level of outrage and activism on multiple fronts, most notably in initiatives from legislators, the SEC and Treasury alike to directly limit the level of pay for managers at the multiple financial institutions that have accepted government funds. Without question, these developments will have far-sweeping ramifications for pay programs at all public companies. More than ever, every Compensation Committee should be scrutinizing every nuance of every one of its executive compensation programs with an eye not only to whether its practices are effective and appropriate, but also how programs will be perceived within and outside the organization.

Pearl Meyer & Partners has taken a look at 10 key issues related to plan design and corporate governance that Boards will be grappling with in the coming year, with recommendations for best practices and pitfalls to avoid:

1) Considering “Optics”
2) Corporate Governance
3) Say on Pay
4) Assessing Risk in Compensation Plans
5) Addressing Underwater Options
6) Pay Programs in a Down Economy
7) Selecting Measures and Setting Goals
8) Managing Career Compensation
9) Stock Ownership Guidelines
10) Peer Group Selection