Tags: cut | executive | pay

Cut Executive Pay Now, Urges Conference Board

By Dan Weil   |   Wednesday, 28 Oct 2009 08:30 AM

A task force of corporate executives, investors, and academic experts created by the Conference Board has released a report urging curbs on executive compensation.

The report calls for scrapping practices such as overly generous severance payments, tax refunds, and personal use of corporate jets.

"Shareholders of American companies and the public deserve to see executive compensation programs that serve shareholders' interests and are explained to shareholders in thoughtful dialogue,” task force co-chairs Robert Denham and Rajiv Gupta said in a statement.

“Implementing the compensation principles we recommend is an important step in restoring the damaged trust in American companies."

Denham, a partner at Munger, Tolles & Olson law firm, is a close adviser to Warren Buffet, and Gupta is former CEO of Rohm and Haas.

In addition to curbing excessive benefits for top executives, the report said, companies should:

• Establish a clear link between pay, strategy and performance;

• Demonstrate credible board oversight of executive compensation; and

• Foster transparency with respect to compensation practices and appropriate dialogue between boards and shareholders.

"It is a lot better for corporations to get compensation right. . . than to have a governmental solution, because that inevitably tends toward the one-size-fits-all," Denham told the Financial Times.

The panel doesn’t have to worry about the seven firms that received much of the federal bailout money. Executive pay czar Kenneth Feinberg determined that the top 25 earners at each company will see their compensation cut in half.

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