The Compensation Committee Handbook

Compensation Committee Handbook

Third Edition

In our post-Sarbanes-Oxley world, the compensation committee chair is widely considered the most difficult role on the board. The consequences of making bad compensation decisions can be severe, ranging from ill-advised legislative initiatives to shareholder revolts. Compensation Committee Handbook, Third Edition is a practical, how-to guidebook designed to help compensation committee members make sensible and defensible decisions at all times.

Covering functional issues such as organizing, planning, and best practice tips as well as compliance advice on the implications of Sarbanes-Oxley and other new regulations, Compensation Committee Handbook provides an indispensable, comprehensive review of the pertinent matters facing compensation committees.Recognizing that there is no single "correct" model for executive pay that will fit every business organization, the Handbook identifies applicable "best practices" that reflect current and pendingregulations that have emerged since the Second Edition, including:

• New SEC "Compensation Discussion and Analysis" disclosure requirements for compensation committees

• New GAAP rules on expensing of stock options and other stock-based compensation

• New IRS regulations on stock-based compensation

• New rules by the Financial Accounting Standards Board, the New York Stock Exchange, and the NASDAQ Stock Market

Compensation Committee Handbook, Third Edition will help compensation committee members better understand their duties and role, and to remind them of both the general and technical determinantsof good compensation committee decisionmaking. The book represents the cumulativeexperience of compensation committeemembers and the breadth of knowledge gained in careers as business executives, government officials, corporate board members, governance experts, compensationconsultants, and academics engaged in the study of business history and practices.

An invaluable resource for compensation committee members, board of directors, CEOs, COOs, CFOs, HR executives, and auditors, this practical, how-to road map provides an in-depth review and analysis of timely and relevant issues facing compensation committees at both public and privately held companies.

This handbook provides reviews of the complex issues facing compensation committees in the wake of Sarbanes-Oxley, and gives advice on organizing, planning, and best practices, melding complex technical information and concepts with both corporate governance principles and sound business judgment. This third edition offers advice on the latest rules and regulations that have developed since the publication of the last edition, with updated information on recently revised GAAP accounting rules and the just-finalized IRS regulations impacting the taxation of stock options. Coverage includes the role and responsibilities of the compensation committee, selecting and training compensation committee members, and practical applications in areas such as incentive compensation and equity-based compensation. Some 125 pages of appendices provide selected rules, regulations, and forms, and list organizations and training opportunities. Reda is an executive compensation consultant. Annotation ©2008 Book News, Inc., Portland, OR (booknews.com)

NEW AND UPDATED INFORMATION ON THE LAWS AND REGULATIONS AFFECTING

EXECUTIVE COMPENSATION

Now in a thoroughly updated Third Edition, Compensation Committee Handbook provides a comprehensive review of the complex issues facing compensation committees in the wake of Sarbanes-Oxley. This new and updated edition addresses a full range of functional issues facing compensation committees, including organizing, planning, and best practices tips.

As the responsibilities of the compensation committee continue to increase, the need for practical and comprehensive material has become even more imperative. Complete with compliance advice on the latest rules and regulations that have developed since the publication of the last edition, Compensation Committee Handbook, Third Edition provides the most up-to-date and reliable information on:

• The latest regulations impacting executive compensation, including new regulations issued by the SEC, recently revised GAAP accounting rules, and the just-finalized IRS regulations impacting the taxation of stock options

• The roles and responsibilities of the compensation committee, including best practice tips and techniques

• Selecting and training compensation committee members

• How to make compensation committees a performance driver for a company

• Practical applications, including incentive compensation and equity-based compensation

Compensation Committee Handbook, Third Edition will help all compensation committee members and interested professionals succeed in melding highly complex technical information and concepts with both corporate governance principles and sound business judgment.

The "Third Edition" of the "Compensation Committee Handbook" provides a comprehensive review of the issues facing compensation committees. It covers functional issues such as organizing, planning, and best practice tips as well as compliance advice on the implications of Sarbanes-Oxley and other regulations. New developments covered in the third edition include coverage of new SEC disclosure requirements for compensation committees, new GAAP rules on expensing of stock options and other stock based compensation, and new IRS regulations on stock-based compensation.

James F. Reda is President of James F. Reda and Associates. Mr. Reda has over fifteen years of executive compensation consulting experience and has written and presented extensively on the subject.

Stewart Reifler is a partner at the New York office of Vedder, Price, Kaufman & Kammholz and head of their executive compensation practice. Mr. Reifler negotiates and structures executive employment, executive severance and retirement, and executive compensation arrangements on behalf of both executives and companies.

Laura G. Thatcher is head of Alston & Bird's executive compensation practice. Ms. Thatcher serves on the Editorial Board of the Journal of Deferred Compensation and chairs the compensation committee of two companies.

Foreword.

Preface.

Acknowledgments.

About the Authors.

Part One. The Modern Compensation Committee.

Chapter 1. The Compensation Committee.

Chapter 2. Selecting and Training Compensation Committee Members.

Chapter 3. CEO Succession and Evaluation.

Chapter 4. Director Compensation.

Part Two. Legal And Regulatory Framework.

Chapter 5. Corporate Governance.

Chapter 6. Disclosure of Executive and Director Compensation.

Chapter 7. Other Securities Issues.

Chapter 8. Tax Rules and Issues.

Chapter 9. Accounting Rules and Issues.

Chapter 10. ERISA and Labor Law, Rules and Issues.

Part Three. Practical Applications.

Chapter 11. Executive Employment, Severance, and Change-in-Control Arrangements.

Chapter 12. Incentive Compensation.

Chapter 13. Equity-Based Compensation.

Chapter 14. Executive Pension-Benefit, Welfare-Benefit, and Perquisite Programs.

Chapter 15. Special Issues.

Epilogue. Looking Ahead.

Selected Resources.

Appendix A. Selected SEC Rules, Regulations, Schedules, and Forms.

Appendix B. List of Organizations and Periodicals.

Appendix C. List of Director’s Colleges and Other Training Opportunities.

Appendix D. Annotated Form of Compensation Committee Charter.

Appendix E. Sample Compensation, Discussion, & Analysis (CD&As).

Glossary.

Bibliography.

Index.