In "Why Tenure is Important for Today’s Compensation Committee Chair" from Boardroom Resources, Meridian Compensation Partners Partner Michael Brittian posits that three years - which reportedly is a typical benchmark for assessing and reappointing (or not) the committee chair - is too short a timeframe for a mandatory Compensation Committee chair rotation. The complex and multi-faceted executive pay environment, long-term nature of performance metrics, and importance of key relationships - which take time to develop, all factor into Brittian's view.
In "Best Practices for Transitioning the Compensation Committee Chair," Brittian effectively outlines an onboarding program for incoming Compensation Committee chairs that encompasses active involvement by the outgoing chair, relevant members of senior management, and the Committee's outside compensation consultant, to effect a smooth transition.
Key action items for management include educating the incoming chair about:
- Process
- Compensation Committee calendar, agenda, and charter
- Timing & sequence for developing and approving executive compensation structures and packages
- Compensation Committee role in CEO performance evaluation
- History of development of the comp program, and the comp program philosophy
- Who is responsible for preparing which materials, which may entail connecting the incoming chair with other members of management or staff, including Legal and HR
Watch the associated Inside America's Boardroom program here.
See our recent report and related Society member-requested Quick Survey on board and committee leadership term limits & rotation requirements, and additional resources on our Compensation Committees, Board Leadership, Board Committees, and Board Practices pages.
These posts first appeared in the weekly Society Alert!