Insights from the NACD Advisory Compensation Council

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Executive compensation continues to be a significant hot-button issue. This panel addressed pressing issues involving compensation. The NACD Compensation Committee Chair Advisory Council is composed of some of the nation’s leading compensation committee chairs, regulators, and shareholder representatives of the Fortune 250. The council engages in robust dialogue on the expectations of the compensation committee, stakeholder communication strategies, and emerging trends; the panel offered lessons learned from the council about how to strengthen other boards’ compensation committee practices.

1. An important issue is defining pay. There is a need for standard definitions and a common nomenclature.

2. A benefit of shareholder engagement on compensation is that there has been a restructuring of the disclosures included in the proxy statement (CD&A). It’s easier to read, more concise, uses charts and is informative—and it tells a story.

3. It is important for the compensation committee not to assume the entire board understands the variables driving compensation: pay philosophy, peer group selection, etc. It’s also important not to be afraid to have a “non-cookie cutter” pay philosophy.

Amy L. Goodman
Partner, Gibson Dunn

Yvonne R. Jackson
Director, Spartan Stores; President, BeecherJackson

Robert James
Analyst, Farient Advisors

Nana Mensah
Chairman, Compensation and Leadership Development Committee, Reynolds American Inc.

This summary provided by PricewaterhouseCoopers.

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