The Advisors' Blog

Over the past couple of years, we’ve been tracking the trend of compensation committees expanding their scope of focus to cover the broad spectrum of human capital management issues, even beyond workforce compensation-related issues.  Some compensation committees have even regrouped as “people committees.” If your compensation committee has also taken on shouldering human capital management responsibilities, this KPMG memo lists 6 issues that should make it into the compensation committee agenda this year. Here’s a short excerpt:

1. Review Incentives: Ensure that executive & employee compensation plans are aligned with current strategy (which may have changed over the past 2 years) and focused on key drivers of performance

2. Review Benefits: Balance all components of total rewards, including benefits that support worker health & well-being and allow desired work-life balance

3. Consider HCM Metrics: Recognize the role of the compensation committee in the board’s oversight of ESG – be ready to discuss how these issues were considered in plan design, and take stock of which HCM metrics are important to the company and therefore monitored by the comp committee to hold management accountable (in many cases, these metrics will each warrant their own agenda item for the comp committee)

4. Briefing on Shareholder Voting Trends: Understand investors’ and other stakeholders’ expectations for compensation and HCM and be prepared to enhance proxy disclosures, particularly around ESG metrics

5. Corporate Governance: Reconsider compensation committee composition, charter and operations in light of changing responsibilities

6. Revisit Director Pay & Clawbacks: Revisit the structure & level of director pay, and prepare for SEC rulemaking on clawback policies

– Emily Sacks-Wilner