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Dodd Frank Puts Spotlight on Executive Compensation
What is the true impetus for legal and regulatory changes around the practice and disclosure of executive compensation? The overriding themes for publicly held companies updating their best practice approach to executive compensation are transparency to shareholders and accountability for the executives themselves, consultants versed in the field agree.
However, Managing Director for Pearl Meyer & Partners, Deborah Lifshey was somewhat critical of ISS and Glass Lewis’s ‘‘one-size-fits-all approach.’’ She explained that these proxy advisory services ‘‘issue recommendations on what are good or bad compensation practices—points they consider to be good or bad practices—and recommend to shareholders whether they should vote for or against the company’s compensation program. Boards of directors and compensation committees feel compelled to check all the boxes when the practices they lay out are not necessarily the best, and could result, in the worst case, in management leaving for the private sector.’’