Photo of Eric C. Kastner and Thomas T. Kim

Representing Individuals
and Business Worldwide
Since 1976

New Survey: Discrepancies In Communications Over Executive Compensation

Kastner Kim LLP

It seems that while outside directors largely think communications regarding executive compensation are sufficient, managers disagree.

For highly skilled workers in the higher echelons of business, the issue of executive compensation is critically important. But, executive compensation can be complex. In a new survey publicized by Financial Executives International Daily, a disconnect was revealed concerning the efficacy of communications about executive incentive plans.

Managers Felt Not Enough Communications About Executive Compensation, Details Lacking

Internal executive compensation communication is the information provided by a company to their employees who are eligible for pay programs that have incentive plans as a component. The new survey, conducted by a compensation consulting firm, found that most outside directors – 88 percent – felt that the level of internal communications about executive compensation was “just right.” However, a far lower percentage of management – just 56.7 percent – felt the same way.

Internal executive compensation information can be disseminated in many ways, including in print, online or face-to-face. But when communication regarding this type of information is ineffective, the relationship between business goals, an executive’s actions and how those actions will impact the executive’s compensation can be unclear.

When it came to the level of detail provided in executive compensation communications, there was an even greater discrepancy, with 42.7 percent of management saying there was not enough detail in these communications. Only eight percent of outside directions thought the communications did not contain enough detail.

An Executive Compensation Lawyer Can Help Clarify Matters

There is naturally some level of tension between the board, management and various internal stakeholders in an organization. Gaps in communication related to executive compensation can create even wider rifts.

If you are being offered an executive position, you can take steps to minimize uncertainty by thoroughly vetting the terms of your employment agreement in advance. An experienced lawyer can help you bring clarity to your compensation agreement and can get you the full range of benefits and compensation that you deserve for your service.

If you are already in an executive position but issues have come up regarding your compensation due to poor communications, you too could benefit from legal assistance. Stock option rights and other equity award rights often create problems for executives because they can be worth millions but also typically include many complicated terms that must be met prior to exercising them. When facing the loss of unexercised stock options, swift legal action may be required to retain the rights you worked hard to acquire.

You may not get the full information you require concerning executive compensation from your company, but an executive compensation lawyer can help clear the confusion. Get in touch with a lawyer today if you are in need of legal assistance concerning executive compensation.

Keywords: executive, compensation, directors

Kastner | Kim LLP | Attorneys At Law

Contact Us