December 20, 2020 Executive Compensation Executive & Director Pay Design Articles

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What’s the right process for managing the Compensation Committee calendar? A "First Question"

What’s the right process for managing the compensation committee calendar? Here’s a starter guide and checklist:

Concept

Establish an annual calendar and process for Committee meetings throughout the year

Objectives

  • Create an open and collaborative process
  • Ensure that the right dialogue takes place at the right times
  • Avoid surprises at Committee meetings

Initial Checklist

  • Developing an annual calendar:
    • Ensure that all responsibilities outlined in the charter are included
    • Allow for ‘two bites at the apple’ (i.e., two meetings) for larger, more sensitive topics so the Committee can review and discuss before making a decision
    • Consider giving each meeting a theme (e.g., finish out the prior year; finalize plans for the new performance year)
  • Use lighter meetings to cover governance items (e.g., review of charter, stock ownership guidelines, compensation philosophy etc.)
  • Before each meeting:
    • Review draft materials with the Committee Chair and management (sometimes an interim check-in makes sense for sensitive topics or heavy meeting agendas)
    • Flag important topics for discussion
    • Conduct pre-calls with other Committee members, as needed
  • At each meeting:
    • Review minutes from the previous meeting and discuss any follows
    • Review and discuss year-to-date performance relative to incentive goals
    • Ensure enough time is allotted for topics that require Committee input or approval
    • Allow for an executive session at the end of each meeting
  • After each meeting:
    • Debrief with the Committee Chair and management
    • Identify areas to respond to prior to the next meeting
    • Review agenda for the next meeting
    • Define steps, responsibilities, and checkpoints

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