Posts Tagged ‘Board of Directors Governance’

We Agree!

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Expert Perspective by Grahall’s OmniMedia Editorial  Board

In his article published April 22, 2010 in Business Week (The real outrage is how CEOs are paid, not how much)  interviewer Geoff Colvin, writes:  “ It’s outrage season, formerly known as proxy season, when recession-shocked Americans get furious at the new list of insanely overpaid CEOs… The bad-boy headlines will misleadingly suggest that CEO pay levels overall are a problem. They’re not.  As outrage season progresses, we’ll hear plenty about this year’s crop of egregiously overpaid CEOs. Let’s just remember that far more hazardous to shareholders is the irrationally paid CEO.”

We wholeheartedly agree!  But we also believe that the “pitchfork crowd’s” anger over excessive pay is improperly directed at the CEOs.
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The Renewed Focus On Compensation Committees: A Push For True Independence

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In the wake of the recent market turmoil, there has been much finger pointing as politicians, the media, business leaders, and the general public have tried to determine a root cause for the greatest financial crisis in recent memory. As part of the collective public discussion on the economic events that have transpired over the past two years, there has been much ado about executive compensation practices, which have been perceived by many as a primary contributor to the predicament in which many financial institutions and other troubled companies have found themselves.

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New executive compensation and corporate governance rules for 2010 proxy season

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Published in Lexology January 13, 2010 by Seyfarth Shaw LLP

The new rules require a company to consider how, if at all, its overall compensation for employees creates incentives that may impact its risk and management of risk. This new disclosure is only required if a company determines that risks arising from its compensation policies and practices for all employees could have a material adverse effect on the company.

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Corporate Governance Reform May be the Theme for 2010, but Caution Should be the Watchword

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Published in Boardmember January 3, 2010 by Frank Aquila

In the wake of the fallout from the credit crisis we have seen a steady stream of corporate governance reform proposals. While many proposals focus on traditional measures designed to increase shareholder influence, most focus on issues not normally viewed as requiring shareholder input or approval. Proposals such as executive compensation, social responsibility, global warming, sustainability, government influence and political contributions are now high on many agendas.                                                                                       As these proposals are refined over the next few months, a few observations are timely. First, corporate governance now appears to be nothing more than the political fulcrum used to promote and justify a relatively broad range of new restrictions and requirements on Corporate America. Second, many of the groups now staking claim to the “corporate governance” turf are extraordinarily diverse with goals that go well beyond the creation of shareholder wealth. Whether we agree or disagree with their proposals or subscribe to their agendas is irrelevant, it is the current environment creating pressure for further corporate governance changes.

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What Iceberg? Just Glide to the Next Boardroom

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Published in The New York Times, December 27, 2009 by Gretchen Morgenson 

YOU might think that board members overseeing businesses that cratered in the credit crisis would be disqualified from serving as directors at other public companies.
You would, however, be wrong.
Directors who were supposedly minding the store as disaster struck at companies like Countrywide Financial, Washington Mutual or Fannie Mae have not all been banished from other boardrooms. In many cases, directors just seem to skate away from company woes that occurred on their watch.
To some investors, this is an example of the refusal of those involved in the debacle to accept responsibility for it. Whether you are talking about top executives loading up on leverage, regulators who slept while companies took on titanic risks or mortgage lenders that made thousands of dubious loans, few in this crowd have acknowledged culpability. Taxpayers and shareholders, meanwhile, who had nothing to do with the problems, are left holding the bag.

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Take Five: Balancing Compensation & Shareholder Interests

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Published in Boardmember December 24, 2009

An academic argues that perks and golden parachutes may be beneficial to shareholders, and that it is possible to design a compensation plan agreeable to executives, shareholders, and watchdog groups. How can that be? Meet Henrik Cronqvist, assistant professor of financial economics at the Robert Day School of Economics and Finance at Claremont McKenna College.
Corporate Board Member: You’ve suggested that annual cash bonuses should be based on measures that can’t be easily manipulated through accounting practices adopted by management. What types of measures are you referring to?
Henrik Cronqvist: Yes. The preferred measures are those that are all types such as EBITDA: earnings before interest, taxes, depreciation, and amortization. That could be one measure. It’s cash flow based, so in that sense it might be a better measure compared to earnings-based measures that may more easily be manipulated. No measure is likely to be perfect, however. It’s more a question of finding something that is more reasonable, therefore cash flow based measures seem to be favored over earnings based measures.

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Could it be Cainotophobia?

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Expert Perspective by Grahall’s OmniMedia Editorial Board

expert perspective telescopeIn their October 24, 2009 article in the Wall Street Journal (Range of Firms Alter Executive-Pay Policies) , authors Erin White, Joann S. Lublin and Cari Tuna share: “Companies…. are adopting executive-pay plans that echo principles laid out by government regulators, potentially signaling a broad shift in compensation practices… The recession, more than government regulation, is driving some of the moves.”

Certainly the recession has raised awareness of executive pay and resurrected the mantras of pay for performance, long term incentives and risk management as guideposts in today’s business environment. 
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Treat the Disease, Not the Symptom

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Expert Perspective by Grahall’s OmniMedia Editorial Board

expert perspective telescopeIn the October 23, 2009 Reuters article “Anger Over Wall Street Pay Puts Spotlight On Directors” the authors say that “Directors of public companies, especially those who sit on compensation committees, will feel the brunt of the growing focus on pay, at a time when many institutional shareholders and governance critics demand the ouster of ineffectual directors.”

Directors might wonder how they can avoid criticism around compensation decisions, and certainly they do have some very specific actions they can take. 
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“You first, my dear Gaston”

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The Top 10 Ways to make the world of CEO pay a better place
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ALL BUSINESS: Too many boards are still cavalier

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Published in News Day October 10, 2009 by Rachel Beck


Corporate directors don’t like it when shareholders accuse them of being management cronies, but how else can they be seen when they drop the ball on basic responsibilities like leadership development and executive pay?

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