Semler Brossy's Contributions to NACD Directorship Magazine

Organizations that lead in DE&I devote meaningful energy from a strategic perspective by aligning DE&I with business strategy, dedicating sufficient resources, and emphasizing accountability.

The pandemic and other developments have changed the landscape for corporate behavior and strategy. Executive compensation must adapt accordingly for companies to capture fresh opportunities and overcome new challenges.

Spurred in part by the pandemic and the social protests of the past year, shareholders are calling for greater disclosure and commitment to ESG matters, and some are explicitly asking companies to include at least one material, measurable ESG metric in their executive pay plans.

What (if any) role should ESG play in their companies’ compensation plans, and if used, how should ESG-related incentives be structured?

Nearly 30 percent of companies in the S&P 500 used a diversity, equity, and inclusion (DE&I) metric in executive incentive design last year, and a quarter of these businesses did so for the first time, although metrics focus on representation only, easily achieved goals disconnect from long-term aspirations, and metric definitions are not stress tested.

Recognizing both the shrinking of leaders’ tenures and the shifting skill sets needed for future success, many boards are now making succession planning a continual process.

Private companies and private equity- or venture capital-backed pre-initial public offering (IPO) companies fall at one end of the governance and compensation spectrum.

It’s only natural for boards to worry about retention in CEO transitions, whether hiring from inside or outside. When making retention award decisions, boards should consider the following.

Following an extensive internal diagnostic, companies can focus on key HCM areas including, but not limited to, performance management; succession planning; diversity, equity, and inclusion (DE&I); and culture.

Compensation committees must balance wanting to reward executives for adding value to ongoing operations despite external setbacks, with maintaining alignment to the shareholder experience and the integrity of the incentive program.

Pay for performance is a core principle governing compensation program design. However, excessive market volatility and unfavorable macroeconomic or business-specific conditions can result in investment constraints, lower revenue or profitability, and a depressed equity valuation.

The best advisors find solutions that lead to stronger business outcomes, superior leadership, and smarter governance.

Going public means adding structure and formality to many areas of a company. Part of that structure includes forming a compensation committee with a clear charter, delineated responsibilities, and a calendar of actions.

Environmental, social, and governance concerns continue amid heightened scrutiny of corporate behavior through the COVID-19 pandemic and protests over racism and police brutality. It's time to take the next step by incorporating ESG metrics into compensation plans.

By promoting diversity and inclusion, directors spur behavioral modification, not just D&I scorekeeping. They thereby lay the foundation for accelerated and permanent change.

The coronavirus pandemic has upended the key tenets of executive compensation, especially the performance-based incentives that comprise the majority of executive pay.

Three foundational principles for compensation committees

How to deliver rewards that have a more comprehensive assessment of company performance.

Should you exercise discretion to pare back some of the executives' annual bonuses?

With well-thought-out education to advance literacy, people right down to the front lines can be taught the basics of EVA.

Barry Sullivan joins other experts in a Q&A hosted by NACD.

Experts offer their perspectives on how tax law is reshaping pay-plan design, Elon Musk's potential $50 billion payday, and other concerns.

Consultants don't provide their most valuable service in the form of answers to tough questions . They do so by pos- ing the tough questions in the first place.

Semler Brossy's Marc Baranski joined a panel of directors and compensation experts in Atlanta for the Leading Minds of Compensation South event.

Marc Baranski discusses the current and future impact of ESG on pay programs at NACD's Leading Minds of Compensation" South.

For boards, encouraging investment to fulfill future strategy when short-term forces push executives in the opposite direction is a prevalent problem.

Barry Sullivan joins other leading compensation consultants to give advice on some of the most vexing questions and issues facing compensation committee chairs and members.

Executive compensation is a perpetual hot-button topic" and one that activists frequently use to court shareholders. Roger Brossy, managing director of Semler Brossy, talks with Blair Jones, managing director of Semler Brossy, and Ken Bertsch, partner at CamberView Partners, about strategies directors can use to effectively communicate the principles that support the company's pay practices. Watch the video now.

Compensation committees sometimes feel challenged by the task of setting targets for annual goals. Not only do they have to address the upside potential and downside risk in the company's business plan, but also other factors that include external headwinds and tailwinds associated with macroeconomic factors, competitive opportunities and threats, technological disruptions, and regulatory changes. That said, the task of setting annual targets can become quite complex.

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.

Say on pay votes are a barometer of shareholder sentiment on executive compensation and performance. While the fraction of companies that fail say on pay, those that receive less than 50 percent support, is small, such feedback is a warning signal to directors that shareholders are deeply concerned and that action needs to be taken […]

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.

Companies that have not completed a sufficiently well-rounded assessment may find themselves exposed if they disclose that their compensation programs do not incur undue risk and cannot back up that claim. Read the entire article written by Mark Emanuel and Blair Jones.

New directors bring fresh perspectives that contribute to a healthy discussion of all aspects of a business, including compensation, and often challenge the status quo (a notion which can be both good and bad). However, where compensation is concerned, directors would be well advised to look before they leap. This article provides a cautionary tale for companies with well-intentioned directors who may not appreciate that the changes they desire may...

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.

By granting a constant percentage of the company's market capitalization each year, executives' realized gain should directly track the change in value of that market capitalization.

The great challenge in benchmarking a company's executive compensation plan against the plans of peer companies arises from a simple fact: not all long-term incentive programs are created equal. Because companies use differing types and mixes of incentives, with the value of each calculated differently, comparison among programs can be a matter of some complexity.

One of the most important decisions a board makes is identifying and hiring the company's CEO. Given the critical nature of this decision, boards often make major investments in signing packages for new CEOs.

Most companies are not getting the most out of their pay programs because they are not sufficiently deliberate when considering pay prominence.

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.

This is the season when many boards evaluate operating budgets and set targets for incentive compensation plans for executives. The two processes are so commonly blended together, they have essentially become one. And that can be a problem.

Year-over-year changes in CEO pay have a greater effect on the likelihood of passing a future say on pay vote after a failure than shareholder engagement and program changes.

Greg Arnold and Barry Sullivan of Semler Brossy provide insight on balancing pay prominence in executive compensation programs.

Marc Baranski and Todd Sirras discuss the special compensation considerations at financial services firms.

No director wants to see his or her company cited in the newspaper for executivepay transgressions. Especially not on the front page of The Wall Street Journal. And especially when the reporter suggests stock sales from an executive-pay plan hurt shareholders. But that's what happened on Nov. 27, in what might be called the Thanksgiving