February 19, 2020
Compensation Committees: No Rest for the Weary
– Lynn Jokela
This recent Pearl Meyer survey covers compensation committee governance, 2020 executive pay projections, incentive plan design changes and gender pay – and it looks like the workload for compensation committees is only getting heavier. Some nuggets include:
– Increased oversight responsibilities for compensation committees – 39% are now overseeing leadership and talent development, 29% are overseeing diversity & inclusion and 26% are overseeing corporate culture & employee engagement
– Half of survey respondents – 199 companies – recently made or are considering annual incentive plan design changes
– 43% of survey respondents made or are considering long-term incentive plan design changes – most common action being adding new metrics
– Only 14% of public company respondents use or plan to include ESG metrics in executive incentive plans
On a “pay ratio” note, the survey says that CEO salaries are expected to increase by an average of 2.9% next year – compared to 3% for other employees. So that pay component might have a steadying affect on next year’s pay ratios. Of course, CEOs are getting a lot of variable pay too. And in hard numbers, 2.9% of billions of dollars is quite a bit more than 3% of median employee pay…