The Advisors' Blog

This blog features wisdom from respected compensation consultants and lawyers

October 23, 2023

Human Capital: Roadmap for Compensation Committee’s Expanding Role

Since at least 2016, we’ve been pondering the oversight responsibilities of the compensation committee that go beyond “executive compensation.” Thinking and practices are continuing to evolve – especially with new disclosure expectations around “human capital management,” evidenced by last month’s recommendations from the SEC’s Investor Advisory Committee about an HCM disclosure rule and guidance from certain asset managers that encourages disclosure of EEO-1 reports (“or else”).

This new 7-page memo from Semler Brossy gives a roadmap for committees looking to acknowledge HCM responsibilities in their charter. It recommends these steps to help directors fully consider their oversight role on this topic:

1. Clarify the HCM connection

2. Understand the current state

3. Define success

4. Determine responsibilities

5. Update the calendar

6. Share oversight & metrics with investors

In addition to the roadmap, the memo gives sample charter language, matrices for visualizing board responsibilities and HCM agenda items, and key HCM areas that boards & committees tend to oversee.

We’ve posted this resource in our “Compensation Committee Charters” Practice Area – make sure to refer back to it the next time you’re discussing roles or updating charters. Also check out this Semler Brossy article on whether you need a CHRO on your board, and Meredith’s blog about the tricky issue of talent retention in M&A.

Liz Dunshee