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Compensation: Rules of the Road

The thaw in the public markets has sparked significant activity on the IPO front and for other vehicles that are priming the pump and setting the stage to revive the market in 2010. However, this activity is also sparking hiring activity for C-Suite executives needed to round out the management team of these companies. Institutional investors are not going to write checks for companies that are not structured properly or for less than first class management teams. Underwriting of talent is right at the top of the transaction checklist. But so, too, is how the executives will be compensated–with a sharp focus on the alignment of compensation plans with shareholder interests. Recently, the Conference Board Task Force on Executive Compensation issued a set of guidelines and basic principles that should be followed by public companies. At the top of the list is “Establish a clear link between pay, strategy and performance”. Pay-for- performance is going to continue to emerge as a basic in compensation plans, as it should. If you are interested in reading more about these guidelines, the report can be downloaded from the following link: http://www.conference-board.org/pdf_free/ExecCompensation2009.pdf.

Tony LoPinto is CEO of Equinox Partners, an executive search firm specializing in the real estate industry, and parent company of SelectLeaders. The views expressed in this article are the author’s own.
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