Voluntary Risk Assessments of Executive Pay May Be Best Practice, Levine Says

The lure of access by financial institutions to capital from the federal government's TARP program is forcing boards of directors to impose compensation restrictions, according to an article in the January 19th issue of The National Law Journal. Alan Levine, a partner in Morrison Cohen's Executive Compensation and Employee Benefits practice, quoted in the article entitled "Bailout triggers exec pay worries" by reporter Peter Page, said that, while many executives want a legal opinion before agreeing to waive any compensation, at the end of the day, the executives do not have much of a choice. Even publicly traded companies, Levine noted, that are not subject to TARP, are beginning to disclose pay structures that reward risk in their proxy statements. "I think voluntary disclosure will become a best practice," said Levine.