Sense and Recompense: Executive Compensation in the Crossfire

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In-house counsel also must make sure their companies are in compliance with fast-evolving and often murky laws and regulations governing compensation. Disclosure requirements are expanding, but exactly what to disclose and how to render it remains a matter of some interpretation.

"General counsel certainly have become acutely aware of all the new reporting that's required," Conover says. "For that reason alone, anything that goes on now in terms of the compensation committee is immediately in their purview. It's become a big deal."

"Say-on-Pay might get through, but it's a big joke," says Bud Crystal, the longtime compensation guru and founder of the Crystal Report blog. "It's what's called precatory--from the Latin meaning to beg, to pray. And it's a prayer that the board will do something about it. The board can just ignore it. It's not binding. Why the corporate governance priests and priestesses thought this was a burning issue, I don't know."

Risky behavior

Under particular scrutiny is the role of outside compensation advisers. Although consulting with one is already a best practice, new rules may mandate that compensation consultants be hired and paid by the board and strictly prohibited from doing other work for the company.

"[At] issue is the question: Is there transparency through disclosure, and does the board get unbiased information to help them set pay?" Tharp says.

Contributing Author

Steven Andersen

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