October 20, 2008
Moral Hazard and Executive Compensation
– Broc Romanek, CompensationStandards.com
Setting the tone for our big executive compensation conferences that start tomorrow, we have posted an important new alert from Fred Cook, founder of Frederic W. Cook & Co. In Fred’s piece – “Moral Hazard and Executive Compensation” – he addresses what moral hazard means and lays out a number of ways that you can use to mitigate it. We strongly urge you to read this piece and show it to your CEO and directors.
An Opportunity to Comment on RiskMetric’s ’09 Proxy Policies
Last week, RiskMetrics’ ISS Division put up a “Request for Comment” for a number of potential modifications to its policies for 2009. Take advantage of this opportunity to influence these important proxy voting policies through an easy-to-use online form. This year, the topics include:
– Poor Accounting Practices (U.S.)
– Discharge of Directors (Europe)
– Independent Chair (U.S.)
– Names of Director Nominees Not Disclosed (Global)
– Net Operating Loss Poison Pills (U.S.)
– Peer Group Selection for Executive Compensation Comparisons (U.S.)
– Poor Pay Practices (U.S.) Pay for Performance (U.S.)
– Corporate Social Responsibility Compensation Related Proposals (U.S.)
– Share Buyback Proposals (Global)
This Gibson Dunn memo summarizes RiskMetrics’ proposed policy changes. In addition, RiskMetrics has made these survey results from institutional investors available.
As noted in this Reuters article, hold-til-retirement and say-on-pay will be two popular shareholder proposals topics during this proxy season as investors turn their attention to pay practices that encourage excessive risk-taking.