Getting What You Pay For: How Your Compensation Plans Can Create Governance Risk
December 12, 2018
Management incentive plans can create governance risk in several ways:
• Short-term behavior at the expense of long-term value creation, as seen with Mylan
• Reputation-damaging behavior arising from overly aggressive goals, as seen with Wells Fargo
• Significant pay risk leading to excessive business risk, as seen with big banks during the financial crisis
• Even bizarre personal enrichment schemes arising from weak controls, as seen in the Carlos Ghosn affair, echoing what happened at Tyco fifteen years earlier
You may think your company is immune, but every incentive to perform is an incentive to cheat, making the design of incentives and their associated controls an important issue for every company. Marc Hodak, Partner at Farient Advisors and IECG board member, will discuss how you can protect yourself from unintended consequences, or even scandal, with an all-star panel of governance practitioners.