Responding to mounting legislative pressure to regulate the meetings, events and incentive/recognition travel industries, members of the industry-wide coalition formed to lobby the U.S. government issued recommended guidelines for meeting planners working for recipients of government assistance under the Troubled Assets Relief Program (TARP).
Literally fresh off the printers for a Feb. 9 afternoon session at MPI’s MeetDifferent conference, the guidelines seek to “put a stake in the ground” to mark the meetings industry’s stand on regulating what is appropriate meetings and events spending for TARP recipients, according to one of the consortium’s leaders, Christine Duffy, president and CEO of Maritz Travel Co.
“This is a line in the sand, a stake in the ground, for companies receiving public assistance,” Duffy told a standing-room-only audience at MPI’s MeetDifferent conference.
The coalition—made up of the top meetings industry and hospitality associations--seeks to provide firm guidelines for what is acceptable to spend on meetings, events and incentive/recognition programs before the government imposes what the coalition considers “vague” regulations on the industry.
U.S. Sen. Chris J. Dodd (D-Conn.) recently offered an amendment to the bill that would expand the number of companies affected by the bill, and, according to Duffy, could apply retroactively.
In making her case to the audience, Duffy said the government’s current bill was very vague in its guidelines for regulating meetings, events and incentive/recognition programs, using terms such as “reasonable” instead of providing firm guidelines for what is appropriate or not appropriate.
“The last thing we want to do is have the government define ‘luxury ‘for us,” Duffy said, “or what is a ‘reasonable’ meeting or incentive program.”
Joining Duffy was industry attorney Jonathan Howe, general counsel for MPI and legal counsel for other hospitality industry concerns, who described the act as a “gopher bill,” which is a piece of legislation primarily intended to generate a reaction from the public.
Still, Howe said the specter of government regulation could spread beyond merely TARP recipients and possibly affect any company that enters into a government contract as a supplier.
Industry veteran Howe told the crowd that the current atmosphere was “the most challenging and devastating I’ve ever seen, and, I dare say, so have many of you.”
Following are the suggested guidelines recommended by the consortium:
Model Board Policy for Approval of Meetings, Events and Incentive/Recognition Travel
1. General policy statement: The CEO shall be responsible for implementing adequate controls to assure that meetings, events and incentive/recognition travel organized by the company serve legitimate business purposes and are cost justified.
2. All proposed meetings, events and incentive/recognition travel organized by the company must serve one or more specified legitimate business purposes. Each proposed meeting, event or incentive/recognition travel [program] with a cost exceeding $75,000 must be supported by a written business case identifying a specific business purpose.
3. Total annual expenses for meetings, events and incentive/recognition travel shall not exceed 15 percent of the company’s total sales and marketing spend.
4. The amount spent for an employee performance incentive/recognition event shall not exceed 2 percent of the total compensation of eligible participants or 10 percent of total award earners’ compensation.
5. The process for approving meetings, events and incentive/recognition travel, and the procedures for assuring adherence to this policy, will be subject to independent audit to confirm policy adherence.
6. At least 90 percent of incentive program attendees shall be other than senior executives (as defined by applicable Treasury Department guidelines) from the host organization.
7. Performance incentives shall not promote excessive or unnecessary risk-taking or manipulation of financial results.
8. All internal meetings or events attended only by senior executives (as defined by applicable Treasury Department guidelines) and/or board members shall be devoted to specific business purposes, and participating senior executives shall be responsible for any expenses incurred for non-business-related activities.
9. The CEO of the company shall certify to the board at least annually that the foregoing policies are being followed, and are sufficient to provide reasonable assurance that the company’s expenditures for such purposes are not excessive.
10. These policies shall be subject to modification only with board approval stating the specific business rationale for the change in policy.
This model policy is intended for adoption by companies receiving emergency lending from the federal government.
If other companies are interested in adopting these guidelines, they may choose to alter metrics based upon industry size, company size and market sector.
Developed by the American Hotel and Lodging Association, Destination Marketing Association International, International Association of Exhibitions and Events, Meeting Professionals International, National Business Travel Association, Professional Convention Management Association, Society of Incentive Travel Executives and the U.S. Travel Association in consultation with Maritz Inc.
Examples of Legitimate Business Purposes for Meetings, Events, Incentive/Recognition Travel
As with all business expenditures authorized in these challenging circumstances, all proposed expenditures for meetings, events and incentive/recognition travel should be made to strengthen the competitive position of the company in the marketplace and position the company for the creation of long-term value and growth. Below is a representative list of legitimate business purposes for meetings, events and incentive/recognition travel.
• Effective product launches to educate sales force, channel partners and customers.
• Sales conferences and employee meetings to align vision, strategy and tactics.
• Training and staff development meetings--learning environments conducive to adult learning and professional development, improving participants' skills at their trade and/or their familiarity with the company's products or services.
• Employee recognition programs to motivate and reward employees for achievement and productivity.
• Professional conferences that provide networking, education and best practice sharing across companies and industries.
• Performance incentives with clear rule structures that are designed to motivate and reward high performers for exceeding established goals that generate incremental revenue growth for their respective organizations and that are beyond the investment in the program.
• User conferences for customers utilizing the company's products or services to obtain feedback, build networks, provide product training and capture ideas for enhancements to the company's product offerings.
• Product development events designed to generate feedback for research and development purposes.
• Corporate-sponsored events that further charitable purposes.
• Trade shows and similar events that bring prospective buyers and sellers together.
• Strategic, business and financial planning and review meetings.
• Employee meetings as a result of company mergers and/or acquisitions for the purpose of alignment of products, brands and cultures.
