We have just published a new book aimed at providing corporate boards and management with invaluable insights into the ongoing debate on executive compensation. The book, “Balancing the Tension – Current Topics in Executive Compensation,” was written by the Partners, Principals, and Consultants of the firm.
Our book is intended to help key corporate leaders balance the inherent tension of motivating executive teams to create shareholder value in the current complex economic and regulatory environment with the impact of proactive shareholders and say on pay votes.
Executive compensation programs at major U.S. companies are crucial for economic success – for both the companies and the U.S. economy at large. The pay packages are composed of cash and stock incentives directly linked to the companies’ financial performance and stock price returns. As such, the topic is complex and controversial.
Critics of executive pay focus on the magnitude of the pay packages and the purported lack of pay-for-performance alignment, both allegedly enabled by poor corporate governance practices via compliant or allied boards. These criticisms are unfounded and must be refuted with facts and experience. Yet, this contentious environment has raised awareness for the importance of compensation committees’ designing, administering and governing executive compensation programs appropriately.
Our experience and research confirm that executive pay, company performance and the shareholder investment experience are generally aligned at most companies. It also finds that compensation committees set executive pay levels at major companies very thoughtfully, most often gaining insights from carefully selected and highly scrutinized peer groups that reflect the true labor market for their executive talent. Similarly, committees prudently determine incentive plan design provisions and performance expectations to align with ever-changing business strategies and support shareholder interests.
As a result of these and other best practices in executive compensation governance, the vast majority of companies – 98 percent – have received shareholder support on their say on pay votes since the vote started in 2011.
“Balancing the Tension – Current Topics in Executive Compensation” discusses all of these aspects of the executive compensation model – contemporary and emerging program design, administration and governance of programs – based on our extensive research and experience.
The chapters cover a variety of topics, including the changing role and responsibilities of the compensation committee (chapter 1), analysis of incentive goals (chapter 10), paying for performance (chapter 8), gender pay equity (chapters 3 and 18), best practices for using relative TSR in an incentive plan (chapter 13) and many other critical issues.
To download a copy of the eBook, visit here.
To request a copy via mail, click here.