Semler Brossy's "Orientation to Match a New Reality" acknowledges the largely investor-driven expanding expectations and role of directors - and the Compensation Committee specifically - with a series of "new age" topics that management and board leadership should cover in their onboarding of new Committee members in addition to the historical basics, e.g., committee calendar, agendas, and charter.
Suggested additional onboarding topics include:
- How are proxy advisors and shareholders evaluating the executive compensation program? What ESG and business issues might they be integrating when they review compensation?
- What work from other committees or the board might (or should) overlap with or bear on the executive compensation discussion?
- In order to gain sufficient understanding of compensation practices deeper in the organization to understand where business risks might lie, as well as to better appreciate how the median employee’s pay was determined and inputs that may influence gender pay equity, new committee members should understand:
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- The measures used in the different incentive plans, and how the mechanics work
- What could go wrong, and what unintended behaviors could be encouraged
- The company’s compensation philosophy for broader based pay
- The relevant company policies related to talent and pay, and how any outliers are being addressed
- From a succession-planning standpoint:
- Programs and support for leadership development
- How the company is progressing on diversity and inclusion
- How the company ensures that the diversity and inclusion initiatives not only look good on paper, but are also visible, particularly in the leadership ranks
We previously reported here and here on each of Skadden's and Wachtell Lipton's (respectively) Compensation Committee guides that provide must-know information for listed company compensation committees and their advisors about core and other increasingly common committee duties and responsibilities, and practical guidance on how to best discharge them. Appendix resources collectively include a sample annual meeting calendar, a glossary of commonly used terms, and sample compensation committee charters for NYSE & Nasdaq companies.
Access additional resources on our Compensation Committees and Director Orientation/Onboarding topical pages.