Tag Archive: Wall Street Journal

Give Them Something to Talk About: Open Dialogue Fosters Alignment on Compensation

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Executive compensation is again making headlines, as several companies grapple with the new provisions set by Dodd-Frank, including say on pay.

A recent article from the Wall Street Journal noted that “there remains plenty of upward pressure on pay. CEO cash bonuses rebounded in 2010…and executives can be well rewarded by stock grants as company performance and share prices improve. Still, companies face more pressure to defend those packages…”

This news highlights the importance of effective, transparent communications from the boardroom. Now that shareholders of publicly traded companies have an advisory vote on executive pay, board members should be prepared for increased scrutiny of executive compensation packages. It is critical that boards communicate the reasoning behind compensation packages, and how they align with the company’s long-term strategic plans.

Last year, NACD issued the Report of the NACD Blue Ribbon Commission on Performance Metrics: Understanding the Board’s Role, which provided directors with recommendations on using performance metrics to guide compensation decisions, and the board’s role in assessing those metrics. The BRC report serves as a great resource for directors who want to make sure that the established compensation packages demonstrate how the board is rewarding corporate performance.

Improving communications between directors and shareholders can help to promote transparency and build confidence. Shareholders may have more confidence in the board and less reason to challenge compensation packages where supporting metrics are easily available.

For additional tools to help boardrooms navigate both current and future regulatory and environmental changes, please visit the NACD Resources page.

Bigger Paychecks Expected for American Workers

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American workers may be justified in expecting bigger paychecks in 2011.

A combination of booming exports and growing corporate profits is providing momentum to the national economic recovery, with U.S. workers poised to reap the benefits in the form of wage increases.

While companies have single-mindedly focused on cutting costs in recent years, the latest Duke University/CFO Magazine Global Business Outlook Survey found that chief financial officers expect wage increases of 2.5% for 2011, up from the 1.9% they predicted for 2010.

In addition, a recent Wall Street Journal survey found economists are expecting 2011 to see the creation of 180,000 jobs a month. The National Association of Corporate Directors’ (NACD) latest Board Confidence Index (BCI) concurs with this optimistic outlook. A majority of U.S. corporate directors predict that their companies will either retain or expand their workforce, according to data from the NACD BCI for Q4 2010.

While it isn’t clear how widespread the increase in wages might be, some industries, such as manufacturing (which added 136,000 jobs over the past year), may have to actually compete to attract and maintain employees. That is a dramatic shift from today’s job market, providing much-needed relief to individuals who have been worried about finding jobs or keeping the ones they have.

With the official end of the recession having occurred in 2009, the prospect of higher wages and an increase in employment is long-overdue good news for the U.S. workforce. It also means that boards of directors can focus on longer-term goals for their companies, and not worry about simply keeping their companies afloat.