Our Insights

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

Executive Compensation as a Support for a Growth Strategy

Compensation can be critical to building and sustaining motivation and commitment, as well as ensuring the required talent is available and focusing in the right direction. Compensation can help a company attract the right talent to the key roles responsible for driving top-line growth. In addition, with the right leadership in place, incentive plan design can reinforce the growth strategies through performance measures and goals that influence corporate and/or business unit top-line growth. Read more

Follow With Caution

Performance-based compensation for a company’s directors can threaten board objectivity and create possible conflicts of interest. Yet with the right measures and goals, a company can avoid sub-optimization and keep directors aligned with shareholder interests. The best solution may lie in significant equity ownership tied to board tenure. Read more