Compensation Committee and Consultant Independence
Earlier this month, the U.S. Treasury delivered draft legislation to Congress regarding the independence of compensation committees and the compensation consultants they hire. Broadly speaking, the legislation addresses three areas of concern:
Members of the compensation committee must meet new standards for independence similar to the rules under Sarbanes-Oxley regarding members of audit committees.
- Any compensation consultants or legal counsel hired must be independent of management.
- Compensation committees must be provided the authority and funding to hire independent consultants to ensure that the committee bargains for pay packages that are in the best interests of shareholders. Further, if the committee decides not to use its own compensation consultant, it must explain that decision to shareholders.
At Compensation Resources, Inc. (CRI), we remain a truly independent compensation consultant. We offer no other services (insurance, healthcare, benefits, etc.) that could give rise to questions of conflict regarding our advice and counsel to the compensation committee. For more information regarding our Executive and Board of Director Compensation Consulting services, please call us at 201-934-0505 or email us at info@compensationresources.com
