Huge severance packages, personal use of corporate jets, and incentives not tied to long-term performance, should be discontinued, according to a task force convened by the Conference Board. According to the Washington Post, a group of blue-chip companies agreed to voluntarily overhaul executive pay practices before official legislation comes from Washington. “The current economic crisis, precipitated by the meltdown in the financial services industry, has led to a loss of public trust in corporations and other institutions. Executive compensation has become a flashpoint for this frustration and anger,” the task force says in a report released Monday. “In order to restore trust in the ability of boards of directors to oversee executive compensation, immediate and credible action must be taken.” The report addresses controversial benefits, including “golden coffins,” payouts that continue after an executive’s death, and other exclusive benefits not offered to other employees. “We hope that as this report becomes widely available that the practices and recommendations will be followed across industries,” Rajiv Gupta, a former chief executive of Rohm and Haas Co. and a co-chair of the task force that produced the report, said in an interview. “We hope it will gain momentum. These are good common sense principles.”
Blue Chips Embrace Exec Pay Practices
More companies are being proactive, curbing excessive pay practices in anticipation of new legislation in Washington.
September 22, 2009