Another week, another conference as the spring corporate governance season kicks into full gear. This week I attended the 2010 Executive Compensation Conference: Everything Directors and Senior Executives Need to Know About Effective Risk and Reward Sharing, which focused on risk assessments, SEC proxy disclosures, Say on Pay and compensation principles.
While the nearly 100 attendees at the June 9-10 conference at New York City’s Intercontinental Barclay were engaged on all those topics, there was one takeaway I thought many directors should most certainly have. It is a sample “Compensation Placemat” that was shared by Janet M. Clarke, a compensation committee chair with ExpressJet Holdings and Asbury Automotive Group.
What’s a compensation placemat, you may ask? It’s a one-page document that fits into a board book. The placemat (it’s called that because it literally looks like a menu placemat you see in diners) is a quick read of a company’s executive compensation plan complete with the executive pay strategy; a list of peer group revenue, earnings and market value; the company’s officer compensation, a description of the annual incentive and long term incentive plans; the company’s run, or burn, rate (Equilar definition: the sum of options granted and options assumed divided by total shares outstanding.); share ownership guidelines; termination provisions; and director compensation, including retainers, chair premiums and long term incentives.
The particular example that Clarke shared during the panel on how boards can engage management to improve risk management and incentive compensation was put together by Semler Brossy Consulting Group LLC. It is based on an actual compensation placemat for a health care company.
I have included a link to a larger version of the placemat here and in the image above. It’s a shared file using Adobe’s file sharing program.
