Establishing, Reviewing & Disclosing Director Compensation: Here's How

By Randi Morrison posted 03-21-2018 07:40 AM

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In response to heightened investor and proxy advisory firm scrutiny and increased litigation risk, Deloitte's "Is it time to review your board of director compensation program?" recommends reviewing director compensation - including amounts, components, cash/equity mix, equity award design, and stock ownership/retention guidelines - relative to an appropriate peer group - at least biennially, and considering more robust proxy disclosure that better demonstrates to investors, proxy advisors and others that the compensation is reasonable and appropriate.

The memo outlines a number of leading practices and key considerations relative to the director pay program and process, as well as disclosure recommendations and questions for directors to facilitate their evaluation as to whether the actual pay, compensation-setting process, and/or disclosure may warrant tweaks or enhancements. Also included is noteworthy benchmarking data from the Deloitte/Society 2016 Board Practices Report on which board committees most commonly oversee director compensation and the frequency of review.

This post first appeared in last week's Society Alert! Access additional resources on our our Director Compensation topical page.

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