Our Insights

Navigating the Storm: Compensation Committee Best Practices for Today’s Environment

“Storm conditions” on the executive compensation front make it particularly important for a company’s Board to be proactive and make decisions from a position of strength. To explore what Boards, Compensation Committees, and their advisors are thinking and doing, Agenda recently hosted a roundtable discussion by a select panel of Board members and compensation advisors. Blair Jones, a Semler Brossy Managing Principal, participated on the panel. The discussion (captured in the report, “Navigating the Storm”) focused on compensation philosophy and the application of best practices – particularly timely, given the press spotlight coinciding with significant regulatory, legislative, and economic pressures. Effective navigation starts with a compensation philosophy laying out key principles as a foundation for setting goals and rewards and taking necessary actions to ensure the creation and protection of shareholder value. Actions driven by a set of shared principles, coupled with open lines of communication, will serve a board well – ensuring it can proactively and effectively address problems and take action with conviction, appropriately balancing and responding to internal and external pressures. Read more

Four Trends in Executive Compensation

Increased scrutiny of executive compensation has led a majority of companies to revamp their compensation programs, with many emphasizing long-term performance plans to link pay and performance. This examination of four trends in long-term plans explores key considerations to avoid a well intentioned plan with unintended consequences. Read more

Compensation Discussion and Analysis: Lessons Learned

CD&A or exposé? By bringing together all components of executive compensation, the CD&A may give the compensation committee its first look at the scope of the program. A sound program presents a compelling case to investors; a problematic program will raise red flags. Lessons from the first year of CD&A development can be the springboard to diagnose issues, foster dialogue and improve executive compensation design. To support the interests of all stakeholders, executive pay must be grounded in a solid compensation strategy, balance cost with value, truly drive and reward business results, and compel good governance. Read the entire article written by Seymour Burchman, Blair Jones and Doug Tormey as it appeared in Workspan. Read more

CEO Pay: A New Way to Judge the Numbers

Comparing the compensation and financial picture of three actual companies illustrates how three “tests” can help companies get a handle on the reasonableness of CEO pay. The tests check for correlation between pay and performance, value sharing, and peer alignment. The analyses provide a compelling story about the aspects of design that contribute to an appropriate alignment of pay and performance. Read the entire article (PDF) written by Seymour Burchman and Blair Jones. Read more

Comparing Apples to Apples – Ensuring Integrity in Your Compensation Peer Group

The media and activist groups often point to company peer groups as a contributor to excessive executive pay. Shareholders deserve a compelling rationale as to why specific companies are considered peers and for what purpose, e.g., pay comparison, performance comparator, or models for program design? Compensation committees can follow four guidelines to help ensure their peer group represents a reasonable gauge for assessing the competitiveness of company performance and executive rewards. Read the entire article written by Blair Jones, Roger Brossy and Chip Thomas, as it appeared in Workspan. Read more

A New Day for Executive Compensation

Following popular trends in compensation design can lead a company in a very wrong direction. Different business models dictate different approaches, both at the corporate and business unit levels. This two-part article uses case studies to illustrate the importance of addressing executive compensation strategically. A strategic approach considers a company’s business situation and market characteristics, talent requirements and desired performance and rewards philosophy. Read more

Executive SERPs

The use of a performance-based alternative using RSUs has (i) greater alignment with stock performance/shareholder return, (ii) considerably lower accounting cost, and (iii) the potential for upside. In many cases, this alternative will provide a more shareholder friendly way to offer supplemental retirement benefits to executives. Read the entire article (PDF) written by Seymour Burchman and Blair Jones. Read more

Getting Post-M&A Executive Compensation Right

The success of a merger or acquisition transaction rests in large part on the strength and accuracy of the pre-M&A legwork. Executive compensation helps signal what will be important in the new organization and lay some groundwork of how to get there. Successful design and execution of a post-transaction compensation program requires a holistic design approach. Read more