Compensation Strategies to Build Shareholder Value

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Companies face challenges in attracting and retaining executives while meeting regulators and shareholders’ expectations. But there are solutions. Speakers on this panel shared approaches to identifying and developing compensation plans and benchmarking processes for executives and board members.

1. Directors should have an established process for determining compensation plans and engaging contemporary resources. This will enable them to understand the current issues and trends in compensation practices. A process, and the understanding it can provide, will allow directors to utilize business judgment in establishing a compensation package that will attract and retain management as well as meet expectations of regulators and shareholders.

2. When determining and assessing the performance goals underlying the company’s compensation plans, directors should consider the relevance of a given performance goal to the company and its industry, and whether the company’s peers are using that same goal.  Directors should consider the quantitative and qualitative performance measures most relevant to the company, its industry, and its peers.

3. Long-term incentive compensation plans based on the achievement of long-term performance goals serve as the primary motivation behind management retention.

Robert McCormick
Chief Policy Officer, Glass Lewis & Co.; NACD Northern California Chapter

Jane T. Romweber
Partner, Meridian Compensation Partners, LLC

Charles A. Yamarone
Independent Director, United Continental Holdings; Director, Houlihan Lokey’s Capital Markets Group

This summary provided by PricewaterhouseCoopers.

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