The meetings and travel industry was generally hailing the new executive compensation rules issued by the U.S. Treasury Department on June 10 as a bullet dodged. The interim final rule, which is now in a 90-day public comment period, requires companies receiving Troubled Asset Relief Program funds to develop a company-wide policy for meetings, events, and other corporate travel expenses.
The rules are lumped in with TARP requirements for “excessive or luxury expenditures,” an unfortunate positioning, said Geoff Freeman, vice president of the U.S. Travel Association, speaking at the Exhibition and Convention Executives Forum meeting in Washington last Thursday. “Meetings are a necessary business function, not a frivolous expense,” said Freeman. “You don’t hear attacks on companies spending money on advertising or marketing, but you hear attacks on companies spending money on meetings.” It’s a perception that the meetings industry must help change, he said.
However, the rule leaves the interpretation of those policies up to a company’s board of directors, and not to the law of the land. Specifically, it requires that “the board of directors determine what are excessive and luxury expenditures (entertainment or events: office and facility renovations; aviation or other transportation services; and other similar items, activities, or events),” and that the policies be “reasonably designed to eliminate excessive and luxury expenditures.”
The ruling notes that this approach “is similar to the method by which public companies adopted a code of ethics under section 406 of Sarbanes-Oxley.” In that case, companies were given a general framework for a code of ethics but allowed to adopt standards specific to their circumstances.
U.S. Travel and the meetings industry coalition that galvanized after the AIG debacle last fall are urging all companies, even those not receiving TARP funds, to adopt the travel industry’s model board policy guidelines, written in response to the government’s and media’s attack on the value of meetings. If companies know they are following a standard policy, “they won’t be afraid to dip their toe back in the water” and continue meeting, said Freeman.
Visit the Meetings Mean Business Web site for the full text of the rule, the model board policy, and many other resources.