Take Five: Dissecting the SEC’s Executive Compensation Reform Proposals

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Published in Boardmember October 19, 2009

Corporate Board Member spoke with Russ Fradin, Chairman and CEO, Hewitt Associates, about the Securities and Exchange Commission’s proposals, where Hewitt disagrees with the SEC, and what it means for board members.

Corporate Board Member: The Securities and Exchange Commission has proposed five compensation-related reforms and Hewitt, in a comment letter to the SEC, stated that it does not support all of the reforms. Why?

Russ Fradin: We understand what the SEC is trying to achieve and we support the vast majority of reforms that would truly help shareholders determine if executive pay is appropriate and whether it’s tied firmly to a company’s long-term performance. In fact, we support four of the five proposed reforms: providing information on how compensation programs address various risks, informing shareholders who corporate directors are, what stock awards they receive, and how they fit within the company’s leadership.

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