Semler Brossy’s “Four Principles to the Application of Board Discretion” suggests sound, responsible, and investor-friendly ground rules for discretionary adjustments to executive compensation payouts relative to plan. Adherence to these principles, accompanied by adequate proxy disclosure, should go a long way toward mitigating any negative implications associated with the compensation committee’s exercise of discretion, which may be particularly justified during times of extreme market volatility prompted by external business disruptors such as the COVID-19 pandemic and Russia’s invasion of Ukraine.
Access additional resources on our Compensation Committees page.
This post first appeared in the weekly Society Alert!