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Compensation Philosophy & Programs

Browse the latest articles on pay philosophy, including articles on pay prominance, strategic valuation of pay, talent retention methods, framing the compensation discussion and analysis (CD&A) portion of the proxy statement, and non-direct compensation matters such as SERPs and employee benefits.

How to Deal with Equity: Holdings During a Spin-Off

In today’s corporate environment, many companies face increasing pressure to deliver strong returns year in and year out. This pressure can be the catalyst for strategic business conversations that lead to acquiring, consolidating, divesting, or spinning off businesses. Read more

Preparing pay plans for what’s next

The oil environment over the past 18 months has raised a stiff challenge to energy-company compensation committees. In 2015, typical industry pay plans that were neatly crafted to reward executives for increased production and exploration paid off when executives delivered on their promises. But the payoff was often misaligned with share price performance, which fell dramatically across the industry. Read more

Planning Above and Beyond Pay Ratio Disclosure

The bedrock of executive compensation theory is shifting as proposed elements of the Dodd-Frank Wall Street Reform and Consumer Protection Act are completed. So too have the essential principles and philosophies that compensation committees have relied on—and those principles will be shaken further when the executive-pay-to-median-worker ratio must be reported in 2018. Read more

Roger Brossy published in Ethisphere Magazine: Notes From the Field

One would be hard-pressed not to be slack-jawed over the revelation of fraud at Volkswagen in late 2015. The audacious scale of the perpetration—11 million cars, over 8 years, in 36 countries—was hard to fathom. Bad acting on both this and a lesser scale drives observers of corporate governance to reflexively ask, “What’s going on at the top?” Read more

Notes From the Field: Risk May Not Be Inherent in Pay Designs

One would be hard-pressed not to be slack-jawed over the revelation of fraud at Volkswagen in late 2015. The audacious scale of the perpetration—11 million cars, over 8 years, in 36 countries—was hard to fathom. Bad acting on both this and a lesser scale drives observers of corporate governance to reflexively ask, “What’s going on at the top?” Read more

How Incentives for Long-Term Management Backfire

To hear long-term investors tell it, company executives have embraced short-term thinking like never before. Two obvious pieces of evidence: The use of earnings for share buybacks that cost more than they’re worth, and dividend increases that divert cash from long-term investment. Read more

Seeing Beyond the IPO

Leading up to an IPO, compensation planning and strategy often take a backseat to the immediate business demands and actions that are required to take the company public. With so many new requirements, the focus of the Compensation Committee is often on the work needed to prepare for the IPO event, and not on the tomorrows that follow. Read more

Establishing an Effective Equity Strategy as a Newly Public Company

Following an IPO, the outlook for employee equity programs changes overnight. The company instantly goes from a handful of investors to a diverse shareholder base. Governance requirements kick in. Regulators require significant disclosure of compensation and equity practices. Employee expectations shift. And as the company evolves, what worked at one stage doesn’t necessarily work at the next. Read more