The Advisors' Blog

We’ve often discussed here the evolving role of the compensation committee and its ever-widening mandate — especially as it relates to human capital management. This HLS blog from Semler Brossy aims to provide “a roadmap, sample calendars, and tips” to build your “‘next-generation’ compensation committee that can help talent-forward organizations succeed.” For example, here are tips to get started if your compensation committee lacks prior HCM experience:

[W]e have found that a “crawl, walk, run” orientation helps quickly bring everyone up to speed.

Start with report-outs and establish your organization’s baseline of relevant topics (crawl).

From there, have HCM teams provide updates on the progress of HCM initiatives (walk).

Finally, consider bringing in business unit leaders to discuss how they are fostering a healthy culture and retaining talent (run).

The committee will then feel empowered to ask challenging, insightful questions about overall HCM strategies at all levels of the organization. Throughout, the hope is to align these discussions about HCM with discussions on broader compensation strategy.

It can seem overwhelming to add agenda topics to otherwise packed meetings. The blog shares some scheduling tips to make this lift more doable:

New responsibilities will add more time to board meetings, but there are natural times when HCM discussions can align with other agenda items. For companies with a calendar fiscal year, summer meetings are an easier time to review HCM issues stemming from company strategy.

Future committee meetings can then tackle the items identified as HCM priorities, with conversation topics and agendas flowing from these initial discussions. Another time-saving strategy is to pull standard approval and compliance items into a “bonus agenda.” Committees can present those materials with good context ahead of the meeting, ask for questions on the materials, and then get a combined approval.

The blog also gave this interesting example of a board in the “run” stage of HCM oversight:

On the more extreme end of the data-collection spectrum, some boards get feedback directly from management by inviting them into the boardroom. Delta Air Lines, for example, has an employee committee that “relays employee concerns, perspectives, and suggestions directly to our executives and Board of Directors.” While this is far from the norm, it illustrates a potential model for further board/management collaboration in the future.

Speaking of busy compensation committees, the executive compensation world is in a time of great change. Our October “Proxy Disclosure & 22nd Annual Executive Compensation Conferences” are your chance to hear from our great speakers to make sure you’re staying up to speed! Our conferences are Tuesday & Wednesday, October 21 & 22, at Virgin Hotels Las Vegas. And don’t miss out on our Welcome Party Celebrating CCRcorp’s 50th Anniversary from 4 to 7 pm PT on Monday, October 20. (Don’t worry! We have a virtual option if you are unable to attend in person!)

– Meredith Ervine