to maximize the value to the individual while minimizing the taxes to the executive and company, along with minimizing any negative accounting issues for the corporation. These are over and above the basic objectives of any compensation program, which are four-fold:

1. To provide the competitive package necessary

We all succumb to the annual ritual of making a bunch of resolutions about how we will change our lives with the start of the New Year: eat better and healthier foods, exercise more, reorganize our rather hectic and stressful lives in order to live longer, and learn to enjoy what we have. In most instances, regardless of how dedicated we are to these resolutions, most of our good intentions give way to the realities and pressures of everyday living, and before we know it, we are pretty much back to where we were on December 31.

Executive compensation is, in many ways, treated very much the same way. Boards and their Compensation Committees set forth their resolutions on how they will tighten up the criteria for governing and determining executive compensation going forward. Some of this idealism is internally generated based on reasonableness and a strong sense of responsibility on the Board’s part. Unfortunately, this desire to tighten up the decision-making process emanates from external pressures, namely the shareholders, investors and their “watchdog groups”, and various governmental agencies and their “knee jerk” regulations, including recent changes in accounting and tax rules. After all, the basic premises behind executive compensation has always been to maximize the value to the individual while minimizing the taxes to the executive and company, along with minimizing any negative accounting issues for the corporation. These are over and above the basic objectives of any compensation program, which are four-fold:

1. To provide the competitive package necessary t

of how dedicated we are to these resolutions, most of our good intentions give way to the realities and pressures of everyday living, and before we know it, we are pretty much back to where we were on December 31.

Executive compensation is, in many ways, treated very much the same way. Boards and their Compensation Committees set forth their resolutions on how they will tighten up the criteria for governing and determining executive compensation going forward. Some of this idealism is internally generated based on reasonableness and a strong sense of responsibility on the Board’s part. Unfortunately, this desire to tighten up the decision-making process emanates from external pressures, namely the shareholders, investors and their “watchdog groups”, and various governmental agencies and their “knee jerk” regulations, including recent changes in accounting and tax rules. After all, the basic premises behind executive compensation has always been to maximize the value to the individual while minimizing the taxes to the executive and company, along with minimizing any negative accounting issues for the corporation. These are over and above the basic objectives of any compensation program, which are four-fold:

1. To provide the competitive package necessary

Committees set forth their resolutions on how they will tighten up the criteria for governing and determining executive compensation going forward. Some of this idealism is internally generated based on reasonableness and a strong sense of responsibility on the Board’s part. Unfortunately, this desire to tighten up the decision-making process emanates from external pressures, namely the shareholders, investors and their “watchdog groups”, and various governmental agencies and their “knee jerk” regulations, including recent changes in accounting and tax rules. After all, the basic premises behind executive compensation has always been to maximize the value to the individual while minimizing the taxes to the executive and company, along with minimizing any negative accounting issues for the corporation. These are over and above the basic objectives of any compensation program, which are four-fold:

1. To provide the competitive package necessary

decision-making process emanates from external pressures, namely the shareholders, investors and their “watchdog groups”, and various governmental agencies and their “knee jerk” regulations, including recent changes in accounting and tax rules. After all, the basic premises behind executive compensation has always been to maximize the value to the individual while minimizing the taxes to the executive and company, along with minimizing any negative accounting issues for the corporation. These are over and above the basic objectives of any compensation program, which are four-fold:

1. To provide the competitive package necessary

to maximize the value to the individual while minimizing the taxes to the executive and company, along with minimizing any negative accounting issues for the corporation. These are over and above the basic objectives of any compensation program, which are four-fold:

1. To provide the competitive package necessary to attract qualified talent;

2. To assist in retention of that talent, the proverbial “golden handcuff”;

3. To provide the motivation needed to achieve desired results, in effect, the “golden ring”; and lastly,

4. To focus the employee’s attention on specific business objectives, so that what is achieved is consistent with the business strategy.

Just as New Year’s resolutions are all too often sidestepped when realities of every day pressures are confronted, the Board’s resolve to “do the right thing” is sometimes forgotten when undue pressures, whether competitive or self-induced, are encountered. For example, in the case of long-term incentives, we have seen the Compensation Committee give in and provide an award, such as stock options, even though the performance goals were not met and no incentive award was warranted. The explanation often given is that “it was out of the hands of the executives, and we can’t afford to lose our top people”. In reality, the Board’s actions have weakened their own policies, and ignored the reality that there may be more capable individuals available in the marketplace that could achieve the stated business objectives, despite the costs involved in recruiting them. Similarly, a recent example where a Compensat