Corporations should heed early warnings that they may encounter a “perfect storm” during the 2008 proxy season. The lead elements in this storm are executive compensation, forthcoming proxy reforms, and the increasing power of shareholder democracy. The ultimate victims could be boards of directors that fail to pay sufficient attention to the potential impact of these factors.
Let’s examine each of these elements and evaluate what could happen should they come together to form the perfect storm. Then I’ll suggest what companies can do to avoid it.
