O'Reilly logo

Governance, Risk Management, and Compliance: It Can't Happen to Us—Avoiding Corporate Disaster While Driving Success by Richard M. Steinberg

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Recent Achievements

Among shareholders' recent gains are new, enhanced disclosure requirements by the SEC. They relate to such matters as compensation policies and how they drive risk, director and nominee qualifications, the board's leadership structure, and potential conflicts of compensation consultants. To some extent these new proposals are part of the reaction to failures in the boardrooms of financial institutions that dragged down much of the financial system, and for the most part they are positive and widely embraced by the investor community.

Some observers have noted that these disclosures are not onerous, and companies and their general counsels, corporate secretaries, and compliance officers are positioned to get the necessary information. That may be a fair assessment for the most part, but it may cause some angst. Let's take a closer look.

Compensation Discussion and Analysis

The scope of the Compensation Discussion and Analysis disclosure requirement is broadened to require “information about how the company's overall compensation policies for employees create incentives that can affect the company's risk and management of that risk.” The SEC says such disclosure can help investors know whether a company's incentives can tempt employees to take excessive risks. Indeed, the proposal sets forth with some precision the kinds of circumstances that would need additional disclosures. Based on recent history, this rule is reasonable and makes sense. We've seen evidence ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required