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Wanna Buy Some (D&O) Insurance?; More Trends in Compensation

(The following post originally appeared on ONSecurities, a top Minnesota legal blog founded by Martin Rosenbaum to address securities, governance and compensation issues facing public companies.)

September 30, 2009

"Psst - Wanna Buy Some (D&O) Insurance?" This Survey Will Help.

I was interested to read the most recent Towers Perrin survey of D&O insurance practices of around 2,600 public and private companies and non-profits. One of the purposes of the survey is to provide companies with information about the structure and cost of D&O insurance practices of a broad cross-section of companies. Towers Perrin emphasizes that the companies surveyed do not represent a scientific sampling. However, it is helpful to have a reference point for the range of coverage amounts and retention amounts for companies of various sizes.

This survey also reports on various insurance trends, including an increasing number of public companies purchasing only "Side A" coverage, which covers directors and officers only in situations where indemnification from the company is not available. This trend was especially apparent in very large organizations.

More From the Deloitte Executive Compensation Trends Presentation

Last week I mentioned the excellent materials prepared by Deloitte Tax for a presentation on trends in executive compensation, for the Twin Cities Chapter of the National Association of Stock Plan Professionals. A few other compensation trend observations worth noting:

    Around 40% of the largest companies changed their long-term incentive (LTI) plans or granting practices for 2009, including modifying performance measures, reducing LTI grant values, introducing intermediate goals, etc.

    The authors predict a significant decline in LTI grant values for 2009 - in light of lower stock prices, some companies had to reduce grant values in order to manage equity dilution.

    Surveys noted significant increases in executive compensation "clawback" arrangements for large companies.


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