The Advisors' Blog

– Liz Dunshee

This primer from Cleary Gottlieb & PwC takes a close look at the workings of compensation committees – in particular, things the chair and members can do to make the committee more efficient & effective. Here’s the intro:

The work of a compensation committee is much more than just deciding how much money executives make. Many investors see pay decisions as a reflection of the company’s strategy. They know it can have an impact on the company’s culture. And they use it as a window into the board’s oversight role.

How can compensation committees ensure they are supporting long-term shareholder value? By reviewing the internal workings of the committee, and examining the committee members, the meeting agendas, materials and how the meetings are run. And, just as importantly, by looking at how the committee interacts with others. This includes compensation consultants, the full board, other committees and shareholders—as well as with management.

Covered topics include appropriate skill-sets for members and the chair, how to plan the meeting calendar & agenda (with a sample calendar!), best practices for committee procedures & documentation, approaches to shareholder engagement, working with other committees, committee assessments and how to measure intangibles.