Days after the U.S. Department of the Treasury made it a requirement for companies receiving assets from the Troubled Asset Relief Program (TARP) to define and make public a company-wide policy on expenditures (including entertainment, holiday parties, conferences and events), a coalition of meeting, event and incentive travel organizations released a set of guidelines for those companies to adopt.
“We are hopeful that … by having these guidelines developed by people who understand our business, this [will be] a better approach than not responding and having somebody in the government or someone who is not in our industry develop them,” says Christine Duffy, CEO of Maritz Travel and one of the coalition’s leaders. “We also believe companies that have nothing to do with receiving TARP money … may take this and say to their people: ‘We ought to practice this, too. This will be a conservative, safe approach.'”
Jonathan T. Howe of Howe & Hutton Ltd. says the Treasury Department’s requirements will have far-reaching repercussions. The companies affected won’t just be large banks and insurance companies, he says. Local savings and loans, independent banks and credit unions are going to have TARP money thrust upon them, too.
“[The] Treasury Department is saying, ‘You’ve got to have this money, because we want you to start spending more, investing more and lending more,'” Howe explains. “There [also] is the possibility that anyone who enters into a government contract as a supplier, whether they’re providing toilet paper for the TSA or jet aircraft for the military — that government procurement may also begin to require adherence to these particular directives from the Treasury. This is one of the ways the government forces compliance with its regulations, even though the industry may in and of itself not legally be required to do so.”
The coalition’s “Model Board Policy for Approval of Meetings, Events and Incentive/Recognition Travel” is based on existing best practices, and designed to ensure transparency and accountability. Aside from requiring that compliant companies subject their policies and procedures to an independent audit and have CEOs certify to the board annually that the guidelines are being followed, the model policy has provisions to limit the annual expenditure on meetings, events and incentive/recognition travel to 15 percent of the company’s total sales and marketing spend. This also will require that at least 90 percent of the attendance at incentive programs be staff other than senior executives, as defined by applicable Treasury Department guidelines. In addition, the model policy requires that a business plan, outlining the specific business purpose and metrics proving return on investment, be submitted to justify any conference or event projected to cost more than $75,000.
Duffy feels that the meetings industry ultimately will benefit from the scrutiny it’s undergoing now. She takes inspiration from the pharmaceutical industry, which underwent intense scrutiny for how it conducted its meetings and events in the early 1990s, and how it emerged with extremely transparent policies and procedures. “While that sector took a lot of heat, they made some changes, and they still spend the same amount of money on those events [now] as they did back in those days,” Duffy says. “I think that’s really the important message. We have to [ask], ‘How do we make sure that we respond in a way that doesn’t turn this into a Sarbanes-Oxley to the point where the CFO and CEO say, ‘[Meetings] are not worth it.'”
Going forward, the big onus will be on meeting professionals within the organizations to prove the value of meetings and events, and to make sure they adhere to the guidelines and communicate that information to the company’s CEO. “Some companies spend $50-$100 million a year on this category; it is not a simple turn on a switch to ensure that the CEO will be able to report to the board of directors with assurance that they are following these guidelines,” Duffy says. “This is a place where [industry organizations] can work together and really provide people … with tools, suggestions and best practices [to] follow.”
A copy of the model policy, definitions of legitimate business purposes and corporate standards talking points are on the MPI Web site.