EXECUTIVE COMPENSATION Best Practices

Executive compensation practices are under enormous scrutiny from activist shareholders, corporate governance rating groups, the media, and lawmakers. This public controversy over executive pay has resulted from the failure of compensation committees to use "best practices" in establishing CEO compensation and in the failure to adequately explain to shareholders both the methodology used and the growing competition for executive talent with private equity funds.

Executive Compensation Best Practices demystifies this topic, with a hands-on guide providing comprehensive compensation guidance for all members of the board, as well as best practice guidance for compensation committee members and executives who work with the compensation committee.

Authors Frederick Lipman and Steven Hall provide the compensation committee of the board of directors for both profit and nonprofit organizations with a thorough reference to executive compensation best practices, including:

• Establishing goals and objectives for executives before performance
• Tying executive officer goals into the strategic plan of the company as well as the year-to-year budget
• Best practices in establishing peer groups and benchmarking
• Competing with private equity groups for executive talent
• Examples of some of the best practices by major companies in describing to shareholders executive compensation goals and objectives
• Best practices in the routine operations of compensation committees
• Best practices to avoid charges of conflict of interest
• Best practices that should be followed by executives in negotiating their own employment and severance agreements

Including best practice guidance on the new Securities and Exchange Commission (SEC) executive compensation disclosure rules, which were issued in August 2006, Executive Compensation Best Practices contains sample agreement forms and results and analysis of the latest compensation studies.