Our Insights

Three Questions to Pull Back the Curtain on Discretionary Pay

Judgment by directors acting on shareholders’ behalf is a cornerstone of U.S. corporate governance. So why is it so controversial when CEO pay is based on judgment? A more transparent process, with clear expectations and discussions, can focus performance messages and de-mystify the pay decision for all employees in addition to informing shareholders publicly about CEO pay. Read more

Setting Incentives Without a Budget

This is the season when many boards evaluate operating budgets and set targets for incentive compensation plans for executives. The two processes are so commonly blended together, they have essentially become one. And that can be a problem. This article by John Borneman originally appeared in NACD Directorship. Read more

Advancing the Dialogue: Market-Based Framework for Adjustments

Today’s highly uncertain market presents a myriad of challenges when it comes to goal-setting for incentive plans. Over the course of a performance cycle, companies may find that the volatile operating environment may present a variety of unforeseen “headwinds” or “tailwinds” that make the established goals either too challenging or too easy. In this article we explore a market-based framework to automatically adjust plan targets on an “after-the-fact” basis if it is determined that the actual operating environment deviated significantly from the company’s original budgeting and planning assumptions. Conventional wisdom suggests that executives should always hold on to company stock earned through incentive plans. However, recent research conducted by Semler Brossy indicates that stock sales are relatively common practice for long-serving executives, and in this article we offer a principled approach which encourages appropriate diversification over time. Read the entire article (PDF) written by Seymour Burchman and Mark Emanuel. Read more

You’ve Failed Say on Pay—Now What?

Year-over-year changes in CEO pay have a greater effect on the likelihood of passing a future say on pay vote after a failure than shareholder engagement and program changes. Read more

Comp Committee Conversations

Semler Brossy’s Blair Jones and Broadridge Financial Director Stuart Levine discuss the conversations compensation committees should be having to establish optimum remuneration plans. Read more

Solving Incentive Formula Conflicts

How should boards handle situations where the incentive formulas indicate one payout, but directors believe another is more appropriate? Read this article by Barry Sullivan which originally appeared in NACD Directorship. Read more