WHAT EMPLOYERS SHOULD BE DOING NOW
We believe that the most significant issue involves the analysis of compensation related risk; among the changes contained in the final regulation, this is the area that will require the most additional work. To conduct this analysis, in its simplest terms, employers need to inventory all of their compensation programs and examine them in light of the risks that they pose to the enterprise. However, beyond conducting an inventory, employers should be considering the following as part of the assessment:
1. Who should be conducting the assessment - human resource employees, in house counsel, risk function personnel, the consultants who assisted in the creation of the programs, outside counsel and/or independent consultants?
2. What role should the board play-setting standards, working on the preparation of the report, solely as reviewers?
3. How does the enterprise define the terms “risk,” “materiality,” and “reasonably likely”?
4. How does this analysis fit in with the other risk management functions of the board?
5. As this analysis will be ongoing, how can it be structured so future analyses will be easier?