Board Oversight of Executive Pay: Compensation Committee Basics

Board Oversight of Executive Pay: Compensation Committee Basics

Compensation committee members are tasked with designing compensation programs for senior management in a way that links pay with performance, attracts and retains executives, aligns executives’ goals with the company’s long-term strategy, and avoids unnecessary risk-taking. Designing such pay programs requires a firm understanding of compensation committees’ fiduciary duties, along with the basics of setting executive pay.

This Director Essentials guide—co-produced by Mercer and NACD—answers questions such as:

  • How do you develop an executive compensation philosophy that supports the company’s business strategy?
  • What are the basic components and the mix of pay elements that are needed to support the pay philosophy?
  • How do we evaluate whether certain incentive plans are aligned with the company’s pay philosophy?
  • What role does the compensation committee play in engaging with shareholders?
  • How have the risks associated with compensation committee membership changed in recent years?

This article was originally published in NACD

Teresa Bayewitz
by Teresa Bayewitz

Principal

Susan Eichen
by Susan Eichen

Partner, Mercer

Amy Knieriem
by Amy Knieriem

Principal, Executive Law and Regulatory Group

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