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A lot of this shot our viewers have been weighing in a number ways that we have three guests coming up here to -- to address number of the issues that -- been brought up.
With compensation one way shape or form -- -- -- from live they'll select few get to -- in the markets were down forty plus.
On the Dow right now since you know an 82 so you know an 82 mediate so.
We'll keep on top of that as well.
Principal compensation resources and it didn't want to hand who's joining us to talk.
About compensation and isn't it -- are you related.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Grandfather name's Dennis -- -- married unrelated Margaret my hands so Margaret morning and morning and is my grandmother had ten fingers intent.
So real good so bullet hole tough amateur is on one and so that's the relationships on -- -- -- -- things -- No -- you don't talk about.
Our ideas I looked at the same -- -- -- but I couldn't find any your violence that we had to ask a lot in the air that's how works.
Anyway that's has nothing to do with what you're talking about today we're gonna talk about I don't know how much you heard about what -- and Kelsey and I were talking about there with the the compensation question but.
Let's let's get your view on the table only if some of the -- wanna bring in the book where do you stand on all this -- you changes need to be made that this system or do we need to let things work.
I think it's really a little bit of both.
-- My real perspective is that it's probably a new -- in government involvement.
-- we've gone over the last fifteen or twenty years -- every year two years three years the government's doing another layer of involvement into executive compensation.
Have we gotten excessive ingredients sometimes yes some companies have but I think the predominant.
Yeah most companies are really doing a good.
Job with corporate governance and all the things that really make compensation flow in their businesses.
And unfortunately it's the go back to the -- the world -- on the other hand now the banks with some of the egregious compensation practices that.
Make it hard for everybody sound that's a bad -- argument that I exactly like little kids.
But it isn't executive compensation really you know it.
I don't know of the few bad apples out there and in the world and -- not even baffles -- these people.
Our car but the argument that they need to keep pace with celebrities and athletes with single at all.
I don't know I don't have -- quite buy that.
Well let made a good example and that -- that made -- myself at times is that.
Let's -- somebody like Carly Fiorina.
A number years ago she took over an organization and try to merge Compaq and HP together.
And came out on the wrong side of that deal so she made some big compensation during that time period but what are Carly -- and it.
Carly -- -- job prospects today.
It's kind of like the professional football player that -- 567 years and then blows out of me would -- go from there.
Yeah but if I go into the job knives guns and then you get hired and GM don't perform as well leave I mean I I won't sit at home thinking and not gonna get another job and -- gets hurt.
Job to reinvent herself to come out -- -- -- -- on the campaign means UN you know and was.
You know campaigning from McCain -- I don't -- -- but it's sort of missile unless with the demand a lot of money for my.
Employer because I'm gonna say well you know this doesn't work out really am I'm not gonna have -- -- prospects that you need to pay mile I mean is there any other job.
It's pivot let's see the only -- that that would work in this country.
I don't think there would make that example anywhere else and I think that's kind of the one that it's made quite often well aren't just for the fact that this -- -- -- he discussed in some ways because.
-- -- save a bit of football on bass or not great examples because -- salary caps -- of the -- just take a baseball player everybody talks about why a router Manny Ramirez whatever the case -- that make.
A ton a money right.
The idea here is that there there's nobody forcing that seemed to pay them and they can pay them as much as they want to -- -- there's a demanding set.
Other teams and their free agency you don't see a guy no matter how good he -- -- point two years old and had as not eligible for free agency making that must never gonna pay the political out of the free agency -- -- to free agency the demand is set by the market more by Scott Boris but is set by the market so than they.
They they did and they get paid what they deserve -- mean the same way essentially it in -- business right that if if somebody's making it -- You know your contract is up -- and you wanna go and look for another job and and somebody offers you more there's a bidding process and that and that's the way it works mean that.
But that doesn't matter how long you work and why -- why wouldn't CEOs should be set the same way based on how much revenue they bring -- -- like that right exactly and I think we're here where -- -- When you're looking at executive compensation and organization the -- we tackle -- let's look at the pierce.
Let's see what they're earning what's the fare -- middle of the market for that job and let's help the organization the comp committee the board set the appropriate pay levels.
For that people for that person for the talent that they have.
For the role that they're doing in their business and where they're going.
You have to look at their salaries that's pretty -- it's a tight -- we can look at but then you've got bonuses in the equity piece is the long term incentives and that's really typically where the pay -- Has grown exponentially really -- since the ninety's to today right but you know now we're seeing government stepping in putting a little bit more restriction there and also.
But that's the question isn't what's the role of government in that process I think -- got two things is one's institutional shareholders and their watchdog groups saying we want better governance here and you've got the government stepping in and and putting some limits on I mean I think it was a great idea to.
Try and fix up some of the TARP.
Companies know they've taken financial bailout money.
And the stimulus companies have got to -- -- companies the 400 stimulus companies they're asking for money and help in their organizations.
Why not put in some controls but I think it's to what level do you put those controls -- The frequent because you bring out the -- and a taxpayer money being brought in and I think that this is comes down to that the core of what the American people are so upset about is that.
You know they have had to step in to bail outs in the of these companies from -- the CEO's were making hundreds of millions of dollars -- country clubs private jets.
And where they even have a kind of -- they didn't that it took too much risk -- too much leverage out there.
And they were protecting the shareholder which is their number one job so why get so much money I mean you.
And and immediate there should be more rules put in place that again with a -- -- -- did you know you got to do well I mean you know.
When Nardelli was brought in Home Depot and after sixty years in the share -- -- you know whopping 3%.
He got handed two -- and ten million dollars suit to -- I mean.
It doesn't making.
Now and I I think there are some really solid governance good governance provisions within TARP and the stimulus.
You know having to plug it -- but now I -- it let's set it up on some of those claw -- makes a great it's a great.
Situation if you've done something wrong we're going to be asked for the money back.
I -- looking -- this can corporate America police itself and and can they be trusted to rein themselves in because historically.
They haven't done such a great job of that so that's what people are looking to the government because throughout the gonna do it.
There -- arguments against why the government might not be about going to do it but -- who's gonna do it if they're not police themselves and put those in place.
Then where does that leave the -- where does that leave us who's gonna do.
Yeah I think right now we're in a new -- also of corporate responsibility where boards and compensation committees in particular in these public companies are stepping up to a new level you know I've worked in this industry for fifteen years closely with boards.
Where the way they were back in 1994 is not the way they are here in 2009 they are much more conservative there.
Looking harder at performance management and saying.
Can we pay for performance and let's put in the right performance metrics it's no longer -- fog a mirror and get your options are -- you know if you're still breathing you get paid.
Now it's let's -- let's have good shareholder return total shareholder return let's focus on yet.
Economic metrics that we can look back and say.
Have we produce for our shareholders and is there a correlation.
That's the biggest challenges that I think.
The boards are struggling trying to find where's the correlation.
Between the performance in the pay OK there's a there's a disconnect there to right so how is this all gonna look when we come through it I mean what pat what's what are the big changes do you think it -- be -- -- -- to predict.
Once we get through all the back and forth in Washington the politics and everything else.
About how executives are paid in this country that I think he said that the best thing is how -- come through it.
I liken it to being on the playground and saying you know no fair I wanna do over -- and a great place for the do -- So let's sit down I think the organizations have to start one with what's what we believe about pay.
And has a fit into our corporate business our philosophy about our how would our mission our goals are values and how -- pay fit in there.
And then it's salaries in easy components market driven let's put in good performance metrics that are tied to a shareholder return for annual pieces but then the long term component.
Listen organizations like Riskmetrics and others have -- and said.
You can't have a lot of options and restricted stock they're just time based we need at least half of your package in performance based metrics.
I think that's a good thing TARP and stimulus put in some of those things and no more than a third of your pay can be and restricted stock.
They're trying to do a lot of good things I think on the when we wake up and a couple years parks will be less severance will be minimized.
There will be controls in place to make sure that we're getting to a place where the average shareholder can look and say yes they're making a lot of money but they're delivering results -- those years -- they make -- I feel good because they probably made lasting -- hang in there with this for a moment of the guest when I get to you to stay -- -- -- with the the discussion with this identical morning and by the way is for principal compensation resource.
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