The Advisors' Blog

A recent memo from ClearBridge Compensation Group commendably takes on the task of helping corporate secretaries, CHROs and compensation committees make their lives a little easier — identifying five practical steps to improve efficiency. Take a look at all five tasks to see if your compensation committee could implement any this year:

1. Establish a Compensation Committee Calendar

2. Set Standard Grant and Vesting Timing Policies

3. Define New Hire Equity and Bonus Participation Policies

4. Delegate Equity Pool Administration to the CEO (Within Limits)

5. Adopt a Pre-Determined Adjustment Policy for Equity and Incentive Awards

I suspect tips 3 and 5 above are the least commonly adopted. To that end, here’s what the alert suggests on participation policies for new hires:

– Standardizing equity grant and bonus eligibility guidelines (e.g., a cutoff date for new hires to participate in annual bonus or equity programs) ensures consistency in treatment of new hires / promotions

For example, guidelines may determine eligibility and proration approach (e.g., if joining in Q1, receive full grant and full bonus eligibility, but for each quarter thereafter prorate opportunity by 25%)

– Establishing a fixed approach can reduce negotiation of treatment with potential new hires

– Meredith Ervine