The Advisors' Blog

– Broc Romanek, CompensationStandards.com

Here’s a response that was anonymously posted by a member recently in our “Q&A Forum” (#1085), answering the query of “I was looking to find articles, survey data that would address “Do we expand the purview of the Compensation Committee to review not only the Executive officers compensation, but to also include their direct reports”? I would really appreciate if anyone could tell me where I can find this information?”:

My sense is most Comp Committees review more than the executive officers and will extend their purview to a select group of other executives that are part of the senior management “Leadership Team.” That might include all the CEOs direct reports, and could also pick-up some Business Unit leaders who may report to a COO, and may not be executive officers or direct reports to the CEO. I generally advise that 5 may be too few and 15 may be too many, so find somewhere in between that makes sense.

Companies that ask the Comp Committee to review too many executives are placing the committee in an awkward position, as they have very little visibility to what these additional executives are doing and how they are performing, yet, they are being asked to review and approve their pay.

I was thinking that a review of Compensation Committee charters might provide some additional insight on how deep the Committee goes in the organization when approving pay, but a quick look at a few charters did not provide much detail.