Henry Blackiston Published in Bloomberg Law Reports
“A New World for Compensation Committees”

Henry Blackiston’s article, “A New World for Compensation Committees,” was published in the September 2009 issue of Bloomberg Law Reports. In his article, Henry discusses why it is difficult to serve on the Compensation Committee of a public company because new initiatives, proposals and legislation in the area appear so frequently that practitioners claiming expertise hardly have time to digest one sea-change in the rules before another is adopted or proposed. Henry provides examples of the new laws under the Obama administration, including the SEC proposals on proxy disclosure and the TARP legislation. Henry explains that the TARP legislation marks the first time federal regulation has addressed not just compensation disclosure and taxation, but also the form and size of compensation. Henry also discusses the activity of shareholder activist groups in addition to the Treasury Department’s proposed legislation to Congress, which will mandate a “say on pay” advisory vote by shareholders of all public companies. Henry notes that “these four important developments are having and will continue to have a profound impact on the way Compensation Committees do their jobs.”

Henry’s article discusses new best practices for Compensation Committees, including: an emphasis on risk management, the transparency of decisions, and independence. The independence rules for both Committee members and advisors are designed to encourage an independent review of compensation, thereby minimizing the influence of management on compensation decisions and avoiding “bump ups” in pay resulting from that influence.

Henry concludes that “the global financial crises and the resulting regulatory fallout will have a tremendous impact on these Committee responsibilities, by broadening them, and by raising the already high bar for excellence demanded of committee members. The challenges have never been greater.”