The Advisors' Blog

– Gregory Stoeckel, Pearl Meyer & Partners

Restoring confidence in executive compensation programs is critical to preserving the talent and incentives necessary to drive business results that will, in turn, restore confidence in the nation’s economy and financial markets. What’s at stake in the current crisis reaches far beyond shareholder value and touches all key stakeholders in our collective success – creditors, suppliers, customers, employees and communities.

As we see it, what’s required is leadership – not from Washington, but from shareholders’ elected representatives on corporate Boards of Directors. Whereas a politician’s perspective only allows for reactionary policies for all companies based on ideology, the Board’s perspective allows for proactive solutions for each company based on unique circumstances. It is the Board’s perspective that promotes a diversity of responsible and effective pay practices, instead of regulatory and legislative mandates that are generally less effective and lead to unintended negative consequences for companies and their shareholders.

We believe based on personal experience that Directors can provide the leadership needed to address the current crisis. They are up to the challenge of providing the vision to pinpoint a destination, judgment to choose the best road forward, and courage to persevere. But time is short: immediate action is required to avert the threat of suffocating government intervention and to breathe life into the economy.

In this memo, we provide the immediate steps Boards must take to restore confidence in our executive compensation system in a way that preserves its ability to attract, motivate, and retain the best talent to manage through these challenging times.