Allan Reich Quoted in HR Magazine

The cover article in the January 2007 issue of HR Magazine ["HR and the Board : Boards are seeking more input from HR - which raises the profession’s profile but also generates political and other risks"] notes that "It wasn’t that long ago that many corporate boards served essentially as bystanders in the business, rubber-stamping whatever initiatives CEOs laid down. But that was before scandals at Enron and other companies came to light, before the passage of the Sarbanes-Oxley (SOX) Act and the implementation of regulations from the Securities and Exchange Commission (SEC) mandating clearer and more-detailed disclosure of top executive pay. ... Immediately following passage of SOX, audit and other financial matters became corporate boards’ top priorities. Now, HR concerns appear to be moving up the list, according to some experts. But there is evidence that at least some boards are grabbing hold of key strategic HR issues, such as succession planning, talent management and especially executive compensation. This trend likely will be spurred to new heights by recent SEC regulations that took effect Dec. 15 and that impose more-stringent standards for disclosing executive pay. “The new regulations are focused on making sure there is coherent disclosure of total compensation - including salary, benefits and stock options paid to key executives,” says Allan J. Reich, chair of the National Corporate and Finance Practice Group at law firm Seyfarth Shaw in Chicago. ... Another potential risk for HR professionals is that they may be caught in the middle of the demands of the board and the loyalty expected from the CEO. Attorney Reich says HR should be cautious when it decides to speak critically about the CEO to the board. “I represented the executive VP and CFO at an airline company who told the board they didn’t believe the CEO was doing a good job,” he recalls. “The board sided with the CEO. Soon after, the executives were gone.”