The Advisors' Blog

– Eric Marquardt, Towers Perrin

A combined threat of increased regulation, higher taxes and an economic downturn provide the context for executive pay decisions in the near term, and potentially longer term. Companies that have successfully focused on aligning executive pay and performance when financial results and stock price were improving now face the more difficult task of paying appropriately in a turbulent market and avoiding excessive pay for nonperformance.

As discussed in a recent Towers Perrin white paper, companies across all industries need to proactively review their existing executive pay practices in light of recent developments and the new world we find ourselves in. Executive pay programs developed in a different climate and under different business circumstances need to be assessed to ensure there is continued alignment with business strategy, financial results and shareholder returns in the environment ahead.