The Advisors' Blog

Last month, Liz shared part one of a two-part Pay Governance alert series regarding issues that are receiving the greatest attention in board meetings today. Part one focused on the external environment, regulatory landscape, investor landscape and proxy voting dynamics. Recently released part two focuses on compensation strategy – specifically how “boards are adapting their compensation programs and governance practices to address changing workforce dynamics, evolving leadership models, and emerging organizational risks.” If they’re not already, you may want to ensure these topics are on your compensation committee agenda to be discussed in the near future:

– Stick with PSUs or “Go Long”?

– Evolution from ESG Metrics to Broader Human Capital Focus

– Differentiating High Performers and Top Skills

– Navigating Shifts Toward Split Leadership Structures

– Continued Focus on Executive Security

The alert goes into detail on each of these topics. Here’s what it has to say about the evolution of ESG metrics:

Rather than abandoning strategic measures altogether, many companies have shifted toward broader human capital-focused priorities in incentive programs. Metrics such as employee engagement, recruiting, retention, turnover, and talent development have remained prevalent. At the same time, traditional ESG metrics continue to be more widely utilized in Europe and other select international markets, where stakeholder expectations and regulatory frameworks are more supportive. For compensation committees, the implication is not simply replacing one set of metrics with another, but ensuring incentive plans continue to reinforce the strategic drivers of long-term value creation.

– Meredith Ervine