THE OCTOBER 20, 2004 EXECUTIVE COMPENSATION CONFERENCE
Video/Audio Archive and Speaker Materials
7:30 – 8:15 Director Liability and Responsibilities: The Changing Face of Delaware Law
- What are a director’s responsibilities regarding executive compensation in this new era of governance reform
- When might a director incur personal liability for executive compensation decision-making
- Under what circumstances can a director be indemnified for executive compensation decision-making
- Can a director be covered by insurance if indemnification is not available
- What questions should directors be asking about their indemnification
Speakers: Delaware Supreme Court Chief Justice
Myron Steele; Former Delaware Supreme Court Chief Justice
Norman Veasey, now Partner at Weil Gotshal; Professor
Charles Elson, Director, U. of Delaware Center for Corporate
Governance
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8:30 – 8:45 Opening Remarks
– Jesse Brill, Chair
– John Olson, Gibson, Dunn & Crutcher
8:45 – 9:30 What Compensation Committees Should Now Be Doing
- What actions every director now needs to focus on, understand and do
- What is the proper role of the consultant and how should that role be managed by the committee
- How the compensation committee should negotiate CEO compensation
- What every committee should be asking from its consultants and the company’s HR department
Speakers: Fred Cook, Frederic W. Cook & Co.; John Olson, Gibson, Dunn & Crutcher; Diane Doubleday, Mercer Consulting; and Jack Krol, former DuPont Chair and Lead Tyco Director (and director of other boards)
Speaker Materials:
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9:30 – 10:30 What Now Needs to Be Disclosed in the Proxy Statement
- How to meet the SEC’s expectations for more detail and specificity in compensation disclosures and in the compensation committee report, including specific suggestions and examples
- How compensation committee members should review and approve detailed disclosures and representations about a CEO/NEO’s:
– perks, reimbursed expenses and loans – including any forgiveness of loans;
– deferred compensation plans annual interest income and accumulated total amount;
– SERPs and other retirement benefits;
– severance and change in control arrangements; and
– tally of total compensation
- Why the compensation committee report should include a statement that all compensation arrangements were reviewed and tallied up and deemed not excessive – including model language
- What compensation contracts and arrangements need to be filed with the SEC – when, where and how
- What a compensation committee member’s signature on the report means for liability purposes
Speakers: Ron Mueller, Gibson, Dunn & Crutcher; Mark Borges, Mercer Consulting; Michael Melbinger, Winston & Strawn
Speaker Materials:
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10:30 – 11:00 Break
11:00 – 11:30 How to Implement Internal Controls for Executive Compensation – Avoiding Exposure
- Why compensation committees need to ascertain that the company has in place internal controls to avoid potential SEC and PCAOB exposure – and what are committee obligations if internal controls are deficient
- What types of internal controls compensation committees should implement
- What questions every committee should be asking senior management about compensation controls
- What is the CEO and CFO potential certification exposure in this area
Speakers: John Huber, Latham & Watkins; Mike Kesner, Deloitte & Touche
Speaker Materials:
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11:30 – 11:50 The IRS Focus on Executive Compensation: What It Means For You
- What compensation problem areas the IRS is now targeting
- How compensation committees can ensure that these problems don’t exist for them
- What actions compensation committees can take to avoid Section 162(m) violations
Speakers: Bob Misner, IRS; Tim Sparks, Compensia
Speaker Materials:
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11:50 – 12:15 The Institutional Investors’ New Focus on Executive Compensation: What It Means For You
- What compensation areas are key institutional investors targeting for this upcoming proxy season
- What preventive actions compensation committees can take now
- How to avoid/prevent 'just say no' campaigns against re-electing compensation committee directors
Speakers: Pat McGurn, ISS; Paul Hodgson, The Corporate Library; Toni Symonds, Deputy Controller, State of California
Speaker Materials:
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12:15 – 1:45 Lunch – Speaker: Alan Beller, Director of the Division of Corporation Finance, SEC
on "What the SEC Now Expects (and Intends to Do About It)" (note that Alan's speech will commence around 1:00 pm)
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1:45 – 3:30 The Inside Scoop – Red Flags – Revealing Questions to Ask
- What the compensation consultants have wanted to tell the compensation committee
- How to understand the common – but often confusing – components of executive compensation
- What you need to know (and haven’t been told) about Perks, Severance, Deferred Compensation, SERPs, 162(m), Surveys, and more
- How to get a true handle on the CEO’s and NEO’s total compensation
- How to factor in accumulated option and restricted stock gains when making current compensation decisions
- Tally Sheets – what they are, how to use them – why every compensation committee needs to tally up all the components in one place
Speakers: Mike Kesner, Deloitte & Touche; George Paulin, Frederic W. Cook & Co.; Dick Wagner, Strategic Compensation Research Associates; Diane Doubleday, Mercer Consulting;
Tim Sparks, Compensia; Fred Cook, Frederic W. Cook & Co.
Speaker Materials:
- Demystifying SERPs
—Diane Doubleday, Mercer Human Resources Consulting
- The Hidden Costs of SERPs & Deferred Compensation Arrangements - And What to Do About It!
—Diane Doubleday, Mercer Human Resources Consulting
- Talking Points: SERPs
—Mike Kesner, Deloitte & Touche LLP
- Agreements and Surveys
—Tim Sparks, Compensia
- Talking Points: Incentive Plan Sandbagging
—Mike Kesner, Deloitte & Touche LLP
- Talking Points: Severance Payments
—Mike Kesner, Deloitte & Touche LLP
- Restricted Stock
—George Paulin, Frederic W. Cook & Co., Inc.
- Companies With "Hold 'Til Retirement" Guidelines
—Robbi Fox, Hewitt Associates
- A Simple Approach to Understanding How Components of CEO Pay Fit Together
—Richard Wagner, Strategic Compensation Research Associates (SCRA)
- A Sample Tally Sheet – And Analysis of How to Use It
—Richard Wagner, Strategic Compensation Research Associates (SCRA)
- Tallying Top Executives’ Total Compensation
—Fred Cook, Frederic Cook & Co.
- Key Tally Sheet Questions that Compensation Committees Should Be Asking
—Anonymous Task Force Member
- Sample Tally-up Sheet #1 – Change-in-Control Scenario
—Mike Kesner, Deloitte & Touche LLP
- Sample Tally-up Sheet #2 – Change-in-Control Scenario
—Mike Kesner, Deloitte & Touche LLP
- Sample Tally-up Sheet #3 – Change-in-Control Scenario
—Mike Kesner, Deloitte & Touche LLP
- Sample Tally-up Sheet #4 – Change-in-Control Scenario
—Mike Kesner, Deloitte & Touche LLP
- Sample Tally-up Sheet #5 – Change-in-Control Scenario
—Mike Kesner, Deloitte & Touche LLP
- Sample Tally-up Sheet #6 – Change-in-Control Scenario
—Mike Kesner, Deloitte & Touche LLP
- The Need for An Improved Public Disclosure Philosophy
—Richard Wagner, Strategic Compensation Research Associates (SCRA)
- Intel Compensation Committee Report
- Dupont Compensation Committee Report excerpt
- Updated Executive Compensation Policy - Tally Sheets and Internal Equity Checks
— Council of Institutional Investors
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3:30 – 3:45 Break
3:45 – 4:30 What is the Appropriate Amount of Compensation for CEOS
- What responsible ways (and yardsticks) can be used to structure each component of top executives’ compensation, including cash compensation, bonuses, stock compensation, retirement plans, severance and more
- What types and levels of compensation are now appropriate for CEO pay – and how to identify them
- What should be the role of surveys regarding CEO pay; including how to overcome the problems of defining peer groups
- How to critically evaluate survey data and avoid the pitfalls of benchmarking – red flags and nuggets
- How to implement internal pay equity methodology
Speakers: Don Delves, The Delves Group; Paul Hodgson, The Corporate Library; Mark Van Clieaf, MVC Associates International
Speaker Materials:
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4:30 – 5:00 What to Do About Reviewing Outstanding CEO Pay Packages and Agreements
- Obligations to re-examine, modify existing arrangements
- Fixing and adding "cause" provisions and clawbacks
- Ways to address current excessive compensation and how to have a difficult conversation about rolling back pay
- How to implement meaningful holding periods for outstanding equity compensation
- How to avoid traps for the unwary director when negotiating employment contracts and other compensation arrangements
Speakers: Ron Mueller, Gibson, Dunn & Crutcher; Michael Melbinger, Winston & Strawn
Speaker Materials:
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5:00 - 5:15 Bonus Session: Ten Nuggets to Avoid Costly & Embarrassing Insider Violations
Everything you need to know – in a nutshell – to prevent inadvertent, costly insider trading, Section 16 and Rule 144 violations
Speakers: Jesse Brill, NASPP; Alan Dye, Hogan & Hartson
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