Partner Donald Carleen quoted, <i>Corporate Accountability Report</i>,

Partner Donald Carleen quoted, Corporate Accountability Report, "Executive Compensation Directors Need to Get More Sophisticated as Executive Pay Plans Get More Complex"

In the March 26th Corporate Accountability Report, an article entitled "Executive Compensation Directors Need to Get More Sophisticated as Executive Pay Plans Get More Complex" notes that as "investors focus on curbing excessive executive pay packages, corporate practices are changing to give directors more detailed information on compensation programs as well as more time to understand the information and its implications....Donald P. Carleen, a partner in the New York office of Fried Frank Harris Shriver & Jacobson LLP told BNA March 23 "[that] although it is always difficult to make generalizations...more directors are spending more time focusing on executive compensation packages, asking more questions, getting more material, and hiring their own consultants for advice." He said "some compensation committees are even going over things with directors and holding discussions with compensation committee chairs in advance of meetings to present better packages that might be better received." He added, "A lot of companies are moving into the things that best-run companies did to have an agenda established were they know when issues will be addressed. Subsequently, Carleen told BNA that "[w]hile the historical practice has been for compensation consultants to be hired by management to advise the company on compensation arrangements, directors are also hiring their own consultants." He said "there is now often more than one consultant, which provides a check. The consequences of this practice...are two-fold: first, there is more understanding, and, second, there may also be something of a moderating effect on proposals generally if it is understood that whatever is being proposed will be reviewed by the committee's own compensation consultant." Finally, "[r]eflecting on past cases of controversial executive pay that have been in the newspapers...Carleen said there has been some surprise after the fact on the part of the people involved in the process. That has brought these issues into an even keener focus. You don't want to be a director on a board or committee that is the next to be front page news. " He said "the renewed focus on executive pay is not just a temporary result of these scandals.... Executive compensation has become such a lightning rod for so many things that I think people understand it and will pay attention. There will always be criticism for the size of packages. But...it is one thing to have a large package where directors don't fully appreciate what they were approving, and it is another thing for directors to know what they are approving and to be in a position to defend what they have done."

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