The Advisors' Blog

About 5 years ago, we started to see compensation committees take on a greater oversight role for “human capital” matters. The expansion followed the #MeToo movement and investors pushing for more disclosure about workforce demographics, corporate culture, and other issues affecting employees. A recent memo from the EY Center for Board Matters says that 51% of S&P 500 companies now expressly disclose in their proxy statements that the compensation committee is responsible for human capital – up from 25% in 2021 – and that compensation committees have continued to rename themselves over the past few years to better reflect their role. Here’s more detail:

While some committee references to human capital management oversight are at a high level, others specify oversight of key strategies and programs, including those related to DEI; talent recruitment, development and retention; workplace safety and culture; health and wellness; and pay equity. Notably, references to culture more than doubled (from 11% in 2021 to 24% in 2024). These changes are significant and reflect the board’s focus on the broader talent agenda and how it connects to the company’s overall transformation and resilience goals.

The memo suggests updating the committee charter to reflect new responsibilities – for the sake of clarity and to get “credit” with investors. But don’t add something to the charter unless the committee is actually doing it. The best way to ensure that discussions actually happen is to add them as an agenda item on the annual governance calendar.

– Liz Dunshee