September 22, 2009
Business group pushes executive pay changes
High executive salaries and multimillion dollar severance plans during a recession have undermined trust in U.S. corporations, a Conference Board report said.
The Conference Board Task Force on Executive Compensation, said corporations must take
immediate and credible action, to restore public trust.
The task force members that assembled the report included leading corporate executives, such as Joel Hyatt, a member of the Hewlett-Packard board of directors and David Dillon, chairman and chief executive officer at The Kroger Co.
The task force suggested,
compensation programs should be designed to drive a company's business strategy and objectives and create shareholder value.
To that end, a significant portion of pay should be incentive compensation, with payouts demonstrably tied to performance and paid only when performance can be reasonably assessed, said the report, which was released Tuesday.
Companies should avoid offering executives multi-year packages with generous severance payments,
overly generous golden parachute payments, and stock option restructurings that
are not value neutral, nor approved by shareholders, the report said.