The Compensation Committee Handbook, 4th Edition

CHAPTER 14 Executive Pension-Benefit, Welfare-Benefit, and Perquisite Programs

This chapter provides a general overview of pension-benefit, welfare-benefit, and perquisite programs in which executives generally participate and with which compensation committee members will need to be familiar. Overall, these programs may be an important part to any complete executive compensation package; however, there may be a perception that these programs are excessive. Therefore, it is important for the compensation committee to balance the full array of programs and to properly disclose the extent of these programs. The compensation committee should also review the necessity for such programs and whether full and transparent disclosure of the program under the executive compensation perquisite disclosure rules released by the Securities and Exchange Commission (SEC) in 2006 would be negatively perceived by shareholders, by the business press, and by the public in general.

There are numerous examples in which the revelation of these programs has produced unwanted controversy (e.g., retirement arrangements at a utility company and a financial services company; apartments at an entertainment company and a conglomerate; miscellaneous “small” perquisites at several conglomerates and a lifestyle company). In addition, as discussed in Chapter 6, the SEC's executive compensation disclosure rules, released in 2006, focused on—among other things—increased disclosure of benefit plans and particularly ...