The Advisors' Blog

Based on skills matrices for the 50 largest US public companies, Farient Advisors recently identified these trends in skills held by compensation committee chairs over the past 5 years:

– Human capital and compensation experience have tripled

– Industry and business acumen has increased by 46%

– Governance, risk management, and public policy expertise have risen by 46%

– Accounting and finance experience has grown by 33%

– Global experience has increased by 32%

The Farient blog also notes that certain soft skills are particularly important for compensation committee chairs, who are often tasked with difficult conversations with executives and also get a lot of face time with shareholders in engagement meetings.

Emotional Intelligence and Communication Skills: Pay is personal. As Chairs engage with diverse stakeholders — from executives and board members to shareholders and employees — emotional intelligence is paramount. The ability to foster open communication, build trust, and navigate sensitive discussions surrounding pay is essential. Strong interpersonal skills enable the Chair to facilitate engaging and constructive conversations about compensation philosophy and practices, ensuring all voices are heard and considered.

Further, the ability to communicate to shareholders the strategy and rationale behind compensation decisions provides transparency and deepens their understanding of the board’s actions. While not all will agree with every committee decision, understanding that those decisions are rooted in sound strategy, analysis, and governance will go a long way in avoiding undue scrutiny.

– Meredith Ervine