Compensation Design Group Says
Executive Compensation Reform Coming Soon

NEW YORK, NY - February 27, 2002 -- If the Securities and Exchange Commission Chairman follows through on his recent remarks, Enron executives will have to pay back the millions they pocketed from fraudulent earnings, said Frank Glassner, CEO of Compensation Design Group. "This is the type of reform that is needed in the area of executive compensation," he said.

SEC Chairman Harvey L. Pitt told a group of securities lawyers last week that the SEC will try to recover money for investors where executives obtained compensation from "illusory" gains. In effect, those executives who reaped benefits tied to inflated or fraudulent earnings growth will have to give it all back.

"Public outcry from the abuses of Enron Corp. and Global Crossing Ltd. may have been loud enough to cause the SEC to act quickly on much-needed reform," said Glassner, a 26-year veteran of executive compensation. "For too long, some companies have manipulated numbers to show earnings growth that didn't exist in the real world."

In his speech, Chairman Pitt expressed concern about a culture where executives are rewarded for short-term performance and not the long-term fundamental value of a company. "Thanks to the Enron debacle, we have seen what happens when management focuses on short-term gains," said Glassner. "When Chairman Pitt said that the SEC will act in cases where executives collect from illusory gains but do not 'suffer the consequences of subsequent restatements, the way the public does,' he could have been speaking directly to Kenneth Lay himself. With Enron, plenty of innocent people were hurt and lives were ruined."

Although many blame the abuses on tying executive compensation to earnings growth, Glassner disagrees. "At Compensation Design Group, we are long-time advocates of pay for performance and believe that tying executive compensation to company performance is a sound practice," said Glassner. "The problem lies the focus on short-term profitability. When a company's long-term value is not emphasized, motives are bound to go awry."

Glassner applauds the efforts of the SEC and hopes that the combination of SEC rulings and strong corporate governance will help restore public faith in corporate America. "Enron and Global Crossing have been a slap in the public's face," said Glassner. "Allowing those executives to walk away with the cash would be the equivalent of letting a bank robber keep the stolen proceeds and lecturing him to 'never, ever, rob a bank again.'"

Headquartered in New York, with offices in Chicago and San Francisco, the Compensation Design Group is an internationally recognized firm that focuses on delivering cost effective and customized compensation, benefits and human resources programs.