Risk and Pay Regulations Demand Strong ERM Programs
September 21, 2009 Leave a comment
The debate about the Federal Reserve’s plan to regulate pay practices at financial institutions is heating up. Reports in the Wall Street Journal indicate that views on the matter are highly polarized. In addition, experts are suggesting that the new regulations could mean that boards of directors will need to work harder to understand their company’s risk profile and compensation systems. Here is an excerpt from the WSJ.
The Federal Reserve’s new push to regulate pay at U.S. banks will make things more difficult for boards and their compensation committees, already under fire for controversial pay practices. The planned Fed move could increase time demands, recruitment challenges and legal exposure for boards, predict directors and pay consultants. “You’re going to have to make sure the whole board is involved in risk issues,” says Robert E. Denham, a Los Angeles attorney and former chief executive of Salomon Inc. Mr. Denham is co-chairman of an executive-pay task force created by the Conference Board, a New York business group.
Companies and board members will need to rely more than ever on their enterprise risk management (“ERM”) programs to provide timely information to support compensation related decisions. In addition, greater regulatory scrutiny will demand the implementation of strong ERM programs. Wheelhouse Advisors can help your company design and implement a cost-effective ERM program. Visit www.WheelhouseAdvisors.com to learn more.