Resource Library Insights

When it comes to executive compensation and company performance, directors commonly go by the following "rule:" The goals for the coming year should exceed last year's results. Some directors believe that, if performance goals decline, executives should not receive any bonus, even if the business environment won't allow the company to exceed its prior performance record.

To avoid sub-optimizing the performance of a talent-development system, boards need to assure the systems are built from the ground up with pay in mind. If compensation programs reward, motivate, and retain top performers as they move up, sideways, and take on special projects, the highest performing and the highest potential people will remain committed to the organization and become a competitive advantage.

Members of the compensation committee play a key role in reinforcing corporate culture change through compensation program design and administration. Many companies, at critical junctures in their life cycles, must transform their cultures to regain or sustain success. A number of factors combine to define a company's culture (see table), but across all factors, pay can be a key lever for sending signals about changes in priorities, influencing behavior, and...

Recent results on say-on-pay votes suggest that, at times when shareholders become unhappy with executive pay programs, boards are sometimes caught unaware. This lapse seems to happen for a couple of reasons: oftentimes board members don't visit shareholders themselves to hear about pay concerns.

In many situations, it would be desirable to have the flexibility to adjust plan targets automatically on an "after-the-fact" basis if the actual operating environment deviated significantly from the company's original budgeting and planning assumptions. This article lays out an approach for automatically adjusting plan targets in a prescribed manner and illustrates the approach with a case study based on one of our clients.

All businesses are inherently uncertain, which complicates business planning and makes target-setting and year-end decision-making for incentives a challenging endeavor. In these times of volatile national and global markets, the calls for adjustments to formulaic awards are becoming increasingly pervasive.

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.

Companies are facing increasing pressure from shareholders and regulatory mandates to consider compensation vehicles that reward long-term performance. The success of these programs requires identifying the right metrics and establishing suitable goals. This article, written by Seymour Burchman and Blair Jones, provides four approaches to goal setting for performance-based pay programs.

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.

The success of a merger or acquisition transaction rests in large part on the strength and accuracy of the pre-M&A legwork.

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.

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 directors aligned with shareholder interests. The best solution may lie in significant equity ownership tied to board tenure.

Without appropriate goals and measures, business results could be neutral. This article focuses on the identification of appropriate performance measures for all organizational levels and setting mutually supportive goals that reinforce key strategies and lead to improved shareholder value. Read the entire article (PDF) written by Seymour Burchman and Blair Jones.