New Legislation to Allow for Performance Based Incentives

The Pay for Performance Act of 2009 passed in the U.S. House of Representatives last Wednesday. Though the bill was sparked greatly by the backlash against the March 15 payment by AIG of $165 million in employee retention bonuses, it does have implications for the meetings and travel industry as well.

The bill gives U.S. Treasury Secretary Timothy Geithner the power to "prohibit unreasonable and excessive compensation and compensation not based on performance standards." The Treasury Department would be able to provide guidance on what defines "unreasonable and excessive" for companies that have received money from its $700 billion rescue fund.

Why is this news to the meetings industry? Because of Rep. Barney Frank, D-Mass., specific clarification that the legislation deals with compensation, not travel, and in fact assures that any incentive that is performance based is allowed.

Rep. Shelly Berkley, D-Nev., requested a clarification from Rep. Barney on the legislation, saying, "During the past few months, legitimate business travel for meetings, events and incentive programs has dramatically decreased across the country, particularly in my district of Las Vegas. The decline is due in part to the state of our economy but also to the perception that Washington is seeking to limit these legitimate business practices...I would like to clarify with the chairman that nothing in this bill or the amendments to be offered today would discourage or limit the use of meetings, events or incentive travel organized by a company that serve legitimate business purposes."

To this, Rep. Barney replied, "Yes, this bill deals with only with compensation, not with travel. Any incentive that is performance based would be fully allowed. In general, if you sold a certain number of things, you'd win a trip, that would be allowed. Specifically, it does not deal with travel for the business, and it would allow performance based incentives for this or any other purpose."

It's no surprise that such comments have led to some organizations to champion the legislation, such as the U.S. Travel Association. It detailed the legislation under the headline "Major Win: Washington Changing Tune Toward Business Travel."
 

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