Corporate directors and officers have yet another reason to take a careful look at their compensation practices: Executive pay could affect the company’s credit ratings.
In addition to institutional investors, who have been increasingly outspoken on executive compensation practices in recent months, ratings agencies are now acknowledging that pay practices are one of many factors being used to ascertain credit risk. Two of the major ratings agencies have told Compliance Week that executive pay is a factor in assigning ratings, and that unexplained, outsized pay packages may raise a red flag.
