Semler Brossy's "Executive Pay Metrics Moving Beyond Just the Numbers" addresses the increasing interest in exploring unconventional, non-financial compensation goals that support the company's long-term strategy, and suggests how companies may incorporate strategic metrics into their incentive pay programs in ways that investors will understand and support.
Recommendations, which are accompanied by examples of companies that purportedly demonstrate the principles effectively, include:
- Explain the link between chosen strategic priorities and value creation
- Carefully balance financial and strategic metrics
- Where possible, choose quantifiable metrics
- Define achievements associated with each performance level
- Consider relative metrics
- Consider different metrics for different executives based on their roles and the results within their line of sight
- Set the goals up front