Conducting a thorough compensation risk assessment is a critical examination of a company’s pay practices and policies to evaluate whether they pose significant material risks. The Securities and Exchange Commission (SEC) mandates that public companies disclose the outcomes of such assessments in their annual proxy statement. Companies are required to explicitly state whether their pay practices harbor risks that could adversely impact the organization.
Unfortunately, many public companies have approached this requirement with insufficient diligence, often merely stating that they don’t perceive adverse risks in their compensation practices. However, without a comprehensive assessment by an impartial third-party advisor, potential red flags may go unnoticed, leading to detrimental consequences in the future.
Kavea stands ready to offer guidance and conduct a meticulous multi-point assessment to ensure the establishment of robust pay structures. This process includes identifying and addressing any potential risks. Outsourcing the risk assessment to an independent third-party consultant adds an extra layer of objectivity, guaranteeing results free from company bias.
Engaging in a compensation risk assessment with Kavea promises a holistic understanding of pay practices, enhancing the precision of your proxy statement. Through this assessment, you can:
- Gain insights into potential risks associated with your pay structures.
- Receive guidance on mitigating identified risks.
- Ensure a thorough and unbiased evaluation through independent third-party expertise.
- Elevate the quality and transparency of your annual proxy statement by partnering with Kavea for a comprehensive compensation risk assessment.
