The Need for The Center
The ongoing debate over executive compensation is focused on the most appropriate
ways to structure executive compensation so that performance incentives are aligned
with results. For the most part, the means and methods have been appropriate and
effective. More than 1,700 publicly traded companies are acting responsibly and
consistent with sound corporate governance standards to the benefit of their shareholders,
employees and the communities they serve.
However, serious exceptions with equally serious consequences have occurred to the
detriment of shareholders, employees and other stakeholders. In response, Boards
of Directors, senior corporate executives, Congress, regulatory agencies, and shareholder
organizations have rightly taken action to strengthen corporate governance standards,
enforce more rigorous pay-for-performance practices, reinforce Board responsibility
for executive compensation and improve disclosure. The net result of all these changes
is that significant improvements have been made in executive compensation.
Still, scandals continue to prompt both scrutiny and debate over governance and
pay practices of publicly held companies by regulators, legislators, watchdog groups
and pension funds. In the absence of a cohesive and reasoned corporate point of
view, some of these well-intentioned efforts unfortunately have resulted in unintended
consequences that have lead to distortions in the mix of pay and increased expenses
and a harmful erosion of the overall reputation of corporate America and its executives.
In today’s emotionally charged world of executive pay, The Center believes that
a reasoned voice on the proper design and governance of executive compensation is
needed to ensure that today’s cure for yesterday’s curse does not become tomorrow’s
crisis.
The Role of The Center
The Center on Executive Compensation was created to develop and promote principled
pay practices and advocate compensation policies that serve the best interests of
shareholders and other corporate stakeholders. Specifically, The Center:
- Provides senior HR executives with a stronger voice in executive compensation matters;
- Offers a thoughtful and principled voice on the proper design and governance of
executive compensation from the corporate perspective;
- Advocates sound practices and policies at the national level that appropriately
bridge the pay-for- performance philosophies of companies with the concerns of key
stakeholders;
- Educates the public and policy makers about the sound corporate governance practices
embraced by the vast majority of U.S. corporations and how their executive compensation
programs align with shareholder and other stakeholder interests;
- Issues timely commentary on current trends and changes being considered in the executive
compensation arena in order to help promote a more balanced point of view; and
- Conducts research and provides to the public in order to help inform the executive
compensation dialogue.
The Center believes that properly designed and managed incentive programs are a
key factor in promoting economic performance and the corresponding benefits that
flow to shareholders, consumers, employees, and society in general.