Blogs

Corporate Secretary’s “Executive Compensation: Insight on companies’ governance” reveals benchmarking data on the board’s oversight of executive compensation and related topics based on the results of a late 2021/early 2022 survey of governance professionals worldwide (59% North America) across predominantly public companies (40% mega- and large cap | 20% mid-cap | 31% small-cap).

North America-specific findings (except as otherwise indicated) include:

• While, as expected, the vast majority of companies report primary oversight of executive compensation by the Compensation Committee, 78% of companies say the board is also involved.
• More than any other region surveyed, 84% of North American companies indicate that their board taps the expertise of an outside adviser on executive compensation matters. Looking solely at responses by company size across all regions, while small-cap boards are the least likely to enlist the help of an outside advisor, the gap is not as large as one might expect, with more than 2/3 of small-cap boards worldwide reporting the use of an outside adviser.
• Nearly half of North American companies (45%) reported no direct board involvement in investor engagement about their executive compensation plans. In contrast, just 23% of European companies reported no direct board involvement.   
• At 37%, North American companies are the least likely to link executive compensation to ESG metrics, compared to, e.g., 60% of European companies. For those North American companies that do, health & safety is the most commonly used metric.
  
• Generally consistent with global average, 18% of North American companies said their board revised its approach to executive compensation planning as a result of COVID-19. Of those, changes to short-term and long-term incentives were the most common (56% and 50%, respectively), with 25% of companies adding human capital management metrics and 25% adding other ESG-based metrics.