Corporate Board Member panel discussion features Professor Roman Weil

Roman Weil, V. Duane Rath Professor of Accounting, told Corporate Board Member magazine that compensation committees have such a big job that hiring a full-time expert consultant makes sense. Weil, a member of the magazine’s 2005 Academic Council, is one of three leading scholars who discuss the growing scrutiny of compensation committees in an article focusing on the changes that have resulted.

According to Weil, an expert consultant provides ongoing advice and support in a cost-effective way that can come in handy when a crisis erupts—and the time it takes to get a consultant on board can be very costly.

When the discussion turned to executive incentives that can be quite complex and sometimes result in large payouts even when a company fails, Weil offers simple advice. “If you don’t understand it, vote no.” He recognizes this is an about-face from when board members tended to go along to get along and may take a while to become standard practice.

One way companies have taken to minimize fallout from CEO perks is convert them to cash. While agreeing it’s a smart move, Weil reminds the panel that tax implications of in-kind payments can still pose issues. Until a cash-only model is standard, boards can still be embarrassed by having to explain why certain perks were used, he told the magazine.

The article appeared in the 2005 Academic Council issue of Corporate Board Member.