New Liabilities for Compensation Committees

From The Corporate Board - Jan/2005

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Directors who ignore changes underway with key institutional shareholders, regulators and the courts related to executive accountability and compensation may be taking unnecessary personal risks. The Disney Decision significantly changed the standards for director liability in determining excessive executive compensation.

This article illustrates how current executive compensation benchmarking practices fail to properly job match and calibrate executive compensation and assumes that roles with the same title are doing the same work thus distorting executive compensation data that boards rely on to set CEO / executive pay.

This has contributed to the spiral in executive compensation and in some cases pay percentiles can be overstated by 100 %.

The 5 Levels of CEO work and the "felt fair pay" multiplier are processes and tools that Directors can use to ensure they are properly benchmarking executive roles and comparable compensation when developing defensible peer groups and making informed executive compensation decisions. A format for the "new compensation report" to the board is outlined.

Major organizations and consulting firms that provide Requisite Organization-based services

A global association of academics, managers, and consultants that focuses on spreading RO implementation practices and encouraging their use
Dr. Gerry Kraines, the firms principal, combines Harry Levinson's leadership frameworks with Elliott Jaques's Requisite Organization. He worked closely with Jaques over many years, has trained more managers in these methods than anyone else in the field, and has developed a comprehensive RO-based software for client firms.
Former RO-experienced CEO, Ron Harding, provides coaching to CEOs of start-ups and small and medium-size companies that are exploring their own use of RO concepts.  His role is limited, temporary and coordinated with the RO-based consultant working with the organization
Founded by Gillian Stamp, one of Jaques's colleagues at Brunel, the firm modified Jaques;s work-levels, developed the Career Path Appreciation method, and has grown to several hundred certified assessors in aligned consulting firms world-wide recently expanding to include organization design