Congress inserted rules on executive compensation into the American Recovery and Reinvestment Act, signed by the president February 17, which included limits on luxury expenditures, including meeting and events.
In the Act's language, TARP recipients must have “a companywide policy regarding excessive or luxury expenditures, as identified by the Secretary, which may include excessive expenditures on: entertainment or events; office and facility renovations; aviation or other transportation services; or other activities or events that are not reasonable expenditures for staff development, reasonable performance incentives, or other similar measures conducted in the normal course of the business operations.”
These rules mirror guidelines announced by the Treasury Department earlier in February, which elicited a strong reaction from a coalition of meeting and business-travel associations and third-party intermediary companies (see list, right). The coalition drafted a 10-point model policy for approval of meetings, events, and incentive travel (see page 10), which it hopes Treasury will adopt as it tackles the job of implementing the new rules and providing guidance to effected companies.
Speaking as One
Christine Duffy, president and CEO of Maritz Travel, and Jonathan Howe, JD, president, senior partner, Howe & Hutton Ltd., chief legal counsel for MPI, outlined the meeting industry's response during a hastily called but packed session at Meeting Professionals International's MeetDifferent conference in Atlanta in mid-February, shortly after the Treasury guidelines were announced. Duffy explained that the coalition galvanized in October 2008 in response to the “AIG effect,” — the trend of corporate meetings to cancel because of perception issues. But while it has had strategic communications and lobbying firms lined up since then, the new TARP rules pushed the coalition into high gear.
Duffy emphasized that the model guidelines are a resource for all companies, not just those receiving TARP funds. If Corporate America “emphasizes the business purposes behind meetings, puts limits on what is spent, and dictates which executives attend meetings,” then government intervention — even legislation — could be avoided, she said.
Duffy hopes companies use the example set by pharmaceutical companies back in the 1990s when they were under attack for their meetings and events practices. “The largest companies tended to put policies into place that went beyond what the regulatory agencies were asking for,” she said. “That conservative, safe approach went a long way for pharma to continue to spend on meetings and events but in a totally transparent way.”
Stem the Tide
Speaking at a press conference announcing the coalition's model guidelines, Roger Dow, president and CEO of the U.S. Travel Association, described the recommended policies as “solid business practices” that can be used as a framework for all companies. He agreed that monitoring expenses at TARP-funded companies is warranted, but said that sensational coverage has “created a paralyzing situation where companies are afraid to have meetings.”
Companies don't want to become the “poster child” for bad behavior, he said, so they are just canceling meetings without regard to whether or not the cancellations are warranted.
“We have to stop this from becoming an epidemic,” Dow said, noting that the meetings and travel industry is responsible for $100 billion in annual spending in the U.S.
In addition to its model policy for meetings and events, the coalition has produced a document with examples of legitimate business purposes for meetings and incentive travel. Look for these on the Web sites of coalition organizations, including U.S. Travel and Site (formerly the Society of Incentive and Travel Executives).
The Coalition Team
The Meeting, Event, and Incentive Coalition, which has come together to lobby government on the importance of meetings and develop model meeting policies for TARP-fund recipients (see story, left), includes representatives from the U.S. Travel Association, Meeting Professionals International, the National Business Travel Association, the Professional Convention Management Association, Site (formerly the Society of Incentive and Travel Executives), the American Hotel and Lodging Association, and Destination Marketing Association International, in addition to various industry suppliers like Maritz and Carlson.
Sign of the (Hard) Times
The high-profile launch of Reed Travel Exhibitions' first U.S. conference — the Americas Incentive Business Travel & Meetings Exhibition — will be delayed at least a year, according to RTE Meetings and Incentive Events Group Exhibition Director Paul Kennedy. Kennedy made the announcement February 25 at the company's Asia-Pacific Incentives and Meetings Expo in Australia, citing the global economy as the reason for the cancellation.
The inaugural AIBTM had been scheduled for June 29 to July 1, 2010, at the Baltimore Convention Center and was expecting to attract more than 400 VIP buyers and 250 exhibitors.