Compensation
Integrity
Compensation
Venture Group has developed a proprietary model for assessing the
integrity, sustainability, and sensibility of executive compensaiton
programs. The model provides both quantitative and qualitative scoring
of executive compensation programs and is currently being statistically
validated.
The
model evaluates four aspects of a company's compensation practices:
"
Shareholder alignment
" Financial efficiency
" Compliance and disclosure
" Execution and operation
Across
these four sets of criteria are four themes:
"
Program governance
" Program design
" Program operation
" Program disclosure
The model
evaluates factors based on criteria established by a combination
of literature review on value creation and corporate governance,
regulatory requirements, standards of interested parties, and widely-accepted
standards of sound compensation design.
There
are two levels of analysis:
"
External assessment which can be conducted for any organization
with the necessary SEC filings (publicly traded US companies, foreign
companies with securities publicly traded on a US exchange, private
companies subject to filing requirements due to equity or debt issuances).
These focus primarily on executive compensation program design and
operation and the relation of compensation practice to stakeholder
value and all-employee programs subject to disclosure (employee
stock purchase plans, pension plans, etc.).
"
Internal assessment which requires direct examination, through interaction
with the company's directors, executives, and employees and review
of documents not publicly available. This focuses on the operation
of executive versus employee plans and the integrity of processes
used in designing, evaluating, and administering compensation programs.
The assessments
include all forms of direct and indirect compensation including
base salary, short-term and long-term incentives, equity based compensation,
benefits, supplemental benefits and perquisites, transition payments
(i.e., change-in-control agreements and severance agreements), and
requirements (i.e., ownership guidelines, noncompete requirements,
clawback provisions).
|
