The Conference Board Task Force on Executive Compensation issued its recommendations for how corporate institutions can begin to restore credibility and trust in executive pay practices. The task force brings together corporate leaders, investors, and governance, legal, compensation, ethics experts to discuss compensation practices. Robert E. Denham, former Chairman and Chief Executive Officer of Salomon Inc., and Rajiv L. Gupta, former Chairman and CEO of Rohm and Haas and a Trustee of The Conference Board, served as co-chairs.
The Task Force recommended five guiding principles, urging public companies to:
- Establish a clear link between pay, strategy and performance;
- Adopt best practices; · Eliminate controversial compensation practices–such as excessive golden parachutes, overly generous severance arrangements; gross-ups; and golden coffins–that conflict with notions of fairness and pay for performance;
- Demonstrate credible board oversight of executive compensation; and
- Foster transparency with respect to compensation practices and appropriate dialogue between boards and shareholders.
The task force plans to encourage companies to commit to best practices in executive compensation. AT&T, Cisco Systems, and Hewlett-Packard, are among the companies already committed to adopting the task force’s guiding principles.
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