Tag: exec comp

Categories
Compliance Tip of the Day

Compliance Tip of the Day: Executive Compensation and Compliance Incentives

Welcome to “Compliance Tip of the Day,” the podcast where we bring you daily insights and practical advice on navigating the ever-evolving landscape of compliance and regulatory requirements.

Whether you’re a seasoned compliance professional or just starting your journey, our aim is to provide you with bite-sized, actionable tips to help you stay on top of your compliance game.

Join us as we explore the latest industry trends, share best practices, and demystify complex compliance issues to keep your organization on the right side of the law.

Tune in daily for your dose of compliance wisdom, and let’s make compliance a little less daunting, one tip at a time.

In today’s episode, what is the role of executive compensation in compliance incentives?

For more information on the Ethico ROI Calculator and a free White Paper on the ROI of Compliance, click here.

To check out The Compliance Handbook, 5th edition, click here.

Categories
31 Days to More Effective Compliance Programs

Executives Compensation and compliance incentives


A 2015 New York Times article by Gretchen Morgenson, entitled “Ways to Put the Boss’s Skin In the Game”, dealt with a long-standing question about how to make senior executives more responsible for corporate malfeasance? Her article had direct application to compliance programs and compensation for senior management tied to compliance. Morgenson said the issue was “Whenever a big corporation settles an enforcement matter with prosecutors, penalties levied in the case – and they can be enormous – are usually paid by the company’s shareholders. Yet the people who actually did the deeds or oversaw the operations rarely so much as open their wallets.”
She went on to explain the economic phenomenon of “perverse incentives” wherein executives are encouraged to take excessive risk because they can profit so much from them, all the while knowing they probably won’t have to pay any fines or face other costly consequences of their actions. To help remedy this situation, the idea has come to the fore about senior managers putting some “skin in the game.
Three key takeaways:

  1. Perverse incentives are named that for a reason; they really are bad.
  2. How can you create positive incentives in your organization?
  3. There is a business response to the legal issue. Employ it.