Check us out in the Biz Times:
http://www.biztimes.com/news/2009/9/18/executive-benefits-network
Post Stimulus Era of Executive Compensation
When the Treasury and Congress introduced the TARP program as part of the economic stimulus plan, executive compensation was pulled into the conversation. It is not surprising that executive compensation was at the forefront of the concern that Congress had when it began thinking about restrictions that needed to be posed on the financial institutions that agreed to take the bailout funds made available by the federal government. The Secretary of the Treasury is technically required to review bonuses, retention awards and other compensation paid to executive officers of any TARP recipients.
The forgoing summary of the provisions of the stimulus bill affecting executive compensation and corporate governance demonstrates that these new restrictions and requirements will have a far-reaching effect, and significantly impact the compensation paid to the executives of the financial institutions that are TARP recipients. Even though the covered financial institutions are a relatively small number, the relevance of these new standards at some point may very well extend to most U.S. public corporations and, eventually, private corporations.
On June 10, 2009, Treasury Secretary Geithner held a press conference and announced a set of five broad-based principles for the purpose of bringing compensation practices into better alignment with the interest of shareholders. These principles include the following:
- Compensation plans should properly measure and reward performance.
- Compensation should be structured to account for the time horizon of risks.
- Compensation practices should be aligned with sound risk management.
- Golden parachutes and supplemental retirement packages should be reexamined in order to confirm that they indeed incentivize performance rather than simply reward executives even when the shareholders lose value.
- Transparency and accountability should be promoted in the process of establishing executive compensation. Compensation committees should be more independent of management, and companies need to be more transparent in explaining their compensation packages to shareholders.
The clear message that can be taken away from this review of the stimulus bill to executive compensation restrictions and the June 10 principles is that change is inevitable. The June 10 principles have calmed the fears of many companies that the administration was going to regulate executive compensation with a heavy hand, by imposing tax and limits on deductible compensation.
As always, please feel free to contact an EBN consultant to explore ideas that fit within the principles of the new government guidelines.
The Resurgence of Whole Life
As Markets waiver, more people turn to cash value life insurance to diversify their investment portfolios.
Follow the link below to continue reading this recently published article in the Special Advertising Section of the Wall Street Journal:
Pat Marget, Managing Director of EBN, attended the 123rd Annual Iowa Bankers Association Convention September 20-22 in Des Moines.
David Fritz and John Anderson, Managaing Partner and Financial Representative of EBN, attended the 28th Annual Community Bankers of Wisconsin Management Conference in Madison last week.
Joe B. Jones, Managing Partner of our Lawerence, KS office and EBN were Gold Level Sponsors at the Kansas Bankers Association CEO Conference in Colorado Springs, CO last month.
