Description
The National Association for Corporate Directors (NACD) established guidelines which encouraged companies to align shareholders’ and directors’ interest in the compensation program for directors. This commission also developed some Best Practices of director compensation plans. Talk about three of the five Best Practices in your initial posting, sharing how you will engage the compensation team members to buy in on your reasons why these three practices spark the most interest to you. Share examples with at least one supporting article to support your rules of engagement.
Here are the five principle or Best Practices:
Director compensation should be determined by the Board and disclosed completely to shareholders.
Director compensation should be aligned with the long-term goals of shareholders.
Director compensation should be used to motivate director behavior.
Directors should be adequately compensated for their time and effort.
Direct compensation should be approached on an overall basis rather that an array of separate elements.
Explanation & Answer
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The National Association for Corporate Director
Director compensation should be determined by the Board and disclosed completely to
shareholders.
Director compensation is a thorny issue since it is simply the board that must decide
the compensation of its individuals. In a perfect world, unbiased directors will decide
compensation for different directors, and investors wil...
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