Based on collective experiences recently shared by representatives of Semler Brossy, UCLA Law’s Lowell Milken Institute, and Latham & Watkins, boards are encouraged to consider enhancing their human capital management (HCM) oversight - specifically across these areas that reportedly are of the greatest interest to investors: (i) Diversity & Inclusion (e.g., pay equity and structural diversity), (ii) Employee Satisfaction and Engagement (including compensation benchmarking, benefits, perks), (iii) Succession and Talent Management, (iv) Attrition and Retention, and (v) Ethics, Workforce Culture and Risk (may include, e.g., exit survey feedback, whistleblower processes) - each of which are explained in greater detail in the report.
The publication - which is based on an August 2019 roundtable - also addresses or includes:
- Investor views, board legal duties, and company disclosure requirements
- Examples of compensation committee names that have been expanded to reflect expanded oversight responsibilities
- Examples of companies that have amended their compensation committee charters to encompass HCM responsibilities
- Illustrative HCM disclosures in proxy statements, CSR reports, and company websites
- Benefits to a more proactive approach to, and consideration of, HCM oversight vis-a-vis investors, employees, company brand and reputation, risk mitigation and more
Those that choose to expand their oversight beyond the traditional areas of executive compensation and risk are also tasked with considering enhanced HCM disclosure.
See Donnelley's "Guide to Effective Proxies - ESG/HCM Section"; our prior reports: "Human Capital Management: Board Oversight," “Compensation Committees” Decline as HCM Assumes Greater Prominence, "Compensation Committee Evolves," and "Compensation Committees: Workforce Diversity & Inclusion" and "Compensation Committee Becoming Human Capital Committee"; and additional information & resources on our Human Capital/Workforce Management and Compensation Committees pages. This post first appeared in the weekly Society Alert!