November 21, 2008
Current Developments: What Every Compensation Committee Should Be Considering Now
– Bob Hayward and Ted Peto, Kirkland & Ellis LLP
Raise your hand if you have been throwing away memoranda concerning the October financial bailout legislation, officially named the Emergency Economic Stabilization Act of 2008, because your company is not a financial institution?
Don’t worry, we suspect you are not alone.
As you begin to prepare for December board and compensation committee meetings, you may want to keep in mind three key issues arising from the financial bailout legislation and recent national elections of particular concern to U.S. public companies that are not financial institutions:
1. Executive Compensation and Risk Management — Executive compensation decisions may increasingly be second-guessed for the risks they encouraged executives to take.
2. Clawback Policies — Anticipate increased scrutiny of clawback policies and campaigns for adoption of policies with more stringent recovery features.
3. Say on Pay — Plan for it to soon be a reality for your company.
See our alert for a “board-level” overview of these issues. One additional piece of information that was released after the date of this alert (which supports the first issue identified above) is the fact that executive compensation emerged as a key concern coming out the meeting this past weekend of the G-20 nations in Washington DC. See Dave Lynn’s recent blog on this topic.