By BLR Founder and CEO Bob Brady
Just My E-Pinion
In the past 2 years, executive comp has been battered as never before. From the general public to Congress—and don’t forget shareholders—there is increased scrutiny over the amount of compensation and its relation to results.
High compensation—some would say obscenely high—is what attracts and keeps the best of the best. Yet it’s also what attracts the hue and cry from every conceivable direction. The Conference Board offers some help to employers and compensation committees who must try to make sense of the situation.
Credibility and Trust
How do you restore credibility and trust in your compensation practices? Here are the five guiding principles that The Conference Board suggests:
1. Compensation programs should be designed to drive a company’s business strategy and objectives and create shareholder value:
- Consistent with an acceptable risk profile
- Through legal and ethical means
- With a significant portion of pay as incentive compensation
- Payouts demonstrably tied to performance
- Paid only when performance can be reasonably assessed
2. Total compensation should be:
- Attractive to executives
- Affordable for the company
- Proportional to the executive’s contribution
- Fair to shareholders and employees
- Structured with payouts that are clearly aligned with actual performance
3. Companies should avoid controversial pay practices unless special justification is present.
Eliminate controversial compensation practices that conflict with the notions of fairness and pay for performance, such as:
- Excessive golden parachutes
- Overly generous severance arrangements
- Gross-ups of parachute payments or perquisites
- Golden coffins
Get a personalized answer within 1 business day with BLR’s all-you-need-in-one-place website, Compensation.BLR.com®. The report is yours to keep regardless of your decision on the program. Read more.
4. Compensation committees have a critical role in restoring trust in the executive compensation setting process.
Committees should demonstrate credible oversight of executive compensation. To effectively fulfill this role, compensation committees should be:
- Independent,
- Experienced, and
- Knowledgeable about the company’s business.
5. Compensation programs should be:
- Transparent
- Understandable, and
- Effectively communicated to shareholders.
Compensation is never easy, but the past year has been a particularly difficult one. A lot of things have changed, causing priorities to shift and business practices to be reevaluated. Are you wondering how closely what you’ve experienced compares with what others in your profession have experienced?
For years, BLR® has surveyed compensation and employee benefits to find out what HR and benefits professionals saw in the preceding year and what they were expecting in the coming year. This year, we are expanding that program by conducting a series of brief, targeted benefits surveys. The findings of these surveys are analyzed and presented free to all respondents.
Today’s Survey Topic: Executive Compensation
- How does your company determine executive compensation?
- Are you confident that your company’s program is equitable for recipients, the company, and its shareholders?
- What components (base, bonus, deferred, stock, benefits, perks) make up your packages?
Take this brief survey and see how your existing practices and future plans stack up against those of the country’s most successful companies. The survey takes only a few minutes to complete, and it will help you stay on top of your industry and keep your organization competitive.
Staying competitive and retaining top talent is the number one challenge in today’s market. Compensation.BLR.com helps you manage that challenge. Get a free special report just for trying the site. Learn More
Complete the Executive Comp Survey Now
By sharing your insight, opinions, and experience, you’ll help us highlight trends and define benchmarks—by industry, geographic location, and size of employer—that will inform your decision making for the coming year.
At the same time, you’ll gain a highly valuable strategic planning tool that will help ensure that your company is offering reasonable, competitive exec comp packages.
Complete the Executive Comp Survey Now
Rest assured that all responses are confidential, and only aggregate findings will be published. All respondents will receive a report of the results.
Thank you for your valued input.
P.S. Here are some upcoming employee benefits surveys:
- Benefits for Part-Time Employees
- Profit-Sharing and Bonuses
- Voluntary Benefits
- Nontraditional Benefits
- Relocation and Business Travel
Complete the Executive Comp Survey Now
Where do you stand on the subject of executive compensation? E-mail us at HRDailyAdvisor@blr.com with your opinion or leave a comment on our website.
Thank you for your participation in BLR’s survey program.