A Practical Guide to Compensation Committee Service: Lessons from the Field

We published the first version of this guide in 2015 — soon after Dodd-Frank was implemented. At ...

Joining the compensation committee is very much like taking on a part-time job in a new professio...

The best compensation committee chairs understand that while they are in a leadership role, their...

The compensation committee charter is a legal document that lays out the responsibilities of the ...

In order to ensure that the committee effectively executes its responsibilities under the charter...

While the actual committee meetings tend to be more informal, having effective processes in place...

a. Meeting Materials Management and the committee’s compensation consultants work together to pr...

Yesterday’s compensation committees are, in many cases, today’s human resources or human capital ...

It is still a mixed practice across boards over whether leadership development and succession pla...

Under Dodd-Frank and the listing standards for the NYSE and NASDAQ, compensation committees are e...

Over the past 5–10 years, committees have become more concerned about the independence of their c...

Two compensation consulting models have developed that are commonly seen in the market: 1) a sing...

Most consultants that you interview will have adequate experience to provide you with the technic...

Most public companies share the same core compensation objectives in some form or another: Ali...

To help achieve a company’s compensation objectives, compensation committees will typically devel...

Pay Mix Relatively few companies make an explicit statement about the precise percentage of pay ...

Building off the definition of the competitive market in the compensation philosophy, most compen...

Annual incentive or bonus design is a complicated topic that could easily serve as the basis for ...

Before diving into the role of performance metrics in the annual incentive plan, it is worthwhile...

Performance Goals Selecting the right performance measures sends a signal to executives about wh...

If annual incentive design could serve as the basis for a book of its own, then long-term incenti...

a. Stock Options Stock options used to be the most prevalent long-term incentive vehicle for sen...

Denomination of Award While annual incentive plans are generally denominated as a cash opportuni...

In contrast to annual incentive plans, where companies rarely use stock price as a performance me...

a. Form of Settlement Most often, awards that are denominated in cash are settled in cash and aw...

In the past, executive perquisites were viewed as an acceptable form of recognition offered to th...

Most companies have qualified retirement plans to provide employees with a source of income when ...

Traditional deferred compensation arrangements provide executives with an opportunity to defer ta...

No discussion of deferred compensation would be complete without touching on IRC Section 409A, wh...

The employment of many senior executives is governed by an employment agreement. Employment agree...

Executive severance benefits are typically provided in two scenarios: (i) termination by the comp...

Since the financial crisis of 2008, U.S. public companies have made great efforts to improve corp...

a. Clawbacks A clawback provision provides the company with the ability to recoup previously pai...

One of the most significant responsibilities of compensation committees is to establish CEO compe...

a. ISS Approach: As a key component of its recommendations to institutional shareholders on how ...

In the past, the proxy statement disclosure of executive compensation was viewed largely as a leg...

Oversight of director compensation can fall under the purview of either the governance and nomina...

Director compensation program design is simpler than executive pay but can have a number of diffe...

In 2009, the SEC began requiring companies to disclose material risks arising from the compensati...

Like their public company peers, many private companies have an executive compensation governance...

Sustaining the business and fostering profitable growth over time are key objectives for family b...

Family vs. Non-Family Executives Another consideration for family businesses is how to compensat...

Venture capital-backed companies are partly or wholly held by one or more venture capital (VC) fi...

Executive compensation design is fundamental to how private equity (PE) companies look to create ...

Companies preparing for an initial public offering (IPO) will need to acquaint themselves with th...

On either side of a merger or acquisition, the compensation committee will typically face challen...

Prior to the signing of the merger agreement, the target company should ensure that there is a cl...

Corporate spin-offs can be a challenging period of time for the compensation committee. Spin-offs...

As the company approaches the spin-off, a key compensation issue is how to adjust outstanding com...

Developing a future compensation program for SpinCo is a critical process that often evolves over...

After the spin-off transaction is complete, it is a good time for the remaining ParentCo to revie...

While executive compensation is subject to considerable external scrutiny, and any compensation c...

Authors and Editors Eric Hosken, Partner New York [email protected] ...