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The Institute of Internal Auditors North AmericaBreadcrumb SeparatorNewsBreadcrumb SeparatorBlog: ​Executive Compensation: The Third Rail for Internal Audit?

Read Richard Chambers' Latest Blog
​Executive Compensation: The Third Rail for Internal Audit?

In his blog, IIA President and CEO Richard Chambers, CIA, QIAL, CGAP, CCSA, CRMA, shares his personal reflections and insights on the internal audit profession. Here's an excerpt from his latest post:

A third rail is a method of providing electric power to a railway train. The amount of electric voltage it carries is often lethal for any living creature that comes in contact with it. The guidance to railway workers and others and others is simple: “Don’t touch it!”

From my experience, too many CAEs see their organization's executive compensation practices as a figurative “third rail” in their organizations, and consequently they “don’t touch it.” Indeed, almost 70 percent of respondents to The IIA’s 2015 Global CBOK survey indicated that they dedicate minimal to no effort in looking at executive compensation. CAEs often indicate that they steer clear of executive compensation because of the extraordinary sensitivity and perceived career risk of examining/questioning their bosses’ pay. Unfortunately, avoiding executive compensation doesn’t make it any less of a risk. In fact, executive compensation programs that are never audited can become even greater risks over time.

Read the full InternalAuditor.org blog post from IIA President and CEO Richard Chambers.