REMCO CORE STEPS

The remuneration committee must make and explain important and sensitive decisions on top pay. To do that well the committee needs relevant, complete, information delivered at the right time.

Setting the annual cycle timeframe is an important first step. Identifying what information is needed, for what decisions and from what sources is vital as well.

Normally both management and outside information is needed. A clear distinction between internal and external sources and between fact, and opinion, is essential.

Outside information may be from remuneration consultants, particularly on the market and governance issues. But some may come from brokers, auditors, lawyers or expert data providers, particularly for ESG and Climate items.

Some information is obvious, the finance information on budgets and results for example. ESG metrics also need information. Here understanding the definitions and calibration takes time, particularly where the measurement systems are new (and maybe changing).

Further information on the shareholder experience and the wider scene is needed, even if not reflected in the direct drivers of first cut incentive results. For example, if a ROCE metric has maxed out, but share price is down 40%, that needs some reflection.

Market information comes in several flavours. The market overall, observed direct competitor practices, the quantum benchmarking against specified pay group peers (at LQ, M and UQ typically) and the governance landscape.

On information, the doctrine of “if in doubt, leave it out” does not apply. Maybe “to be fair, check with the Chair” is better.

On timing, a calendar reporting annual cycle for a Remco might start at 1 July. The Q3 (July/August/September) meeting sets the stage; both for the following end of year decisions, and the new year decisions on outcomes for STI and LTI, which flow into the DRR reporting thereafter.

That pattern is the same for non-calendar year reporting companies, just front-shifted by the appropriate number of months.

On paper the annual agenda breaks into neat meeting slots. The reality is messier. Some items need more than one meeting. The agenda framework might also need in-flight adjustment, as new business items unfold. Think M&A or unexpected hire or retain needs.

While the focus is often on investor views and the vote results, the true focus should remain on the business impact and needs – that puts the horse before the cart correctly.

If that means “explain” rather than “comply,” identify that need early and then consult with shareholders on a timely basis. What seems obvious to the company is not always obvious to shareholders. Time to reframe proposals and re-engage with shareholders should not be underestimated.

As in the law, ignorance is no defence. The Remco members are directors of the company, they should be provided with all the support needed to exercise their duties with diligence and judgement.

Robert Head

Lead Consultant

Robert works with organisations of all types as a reward consultant or interim reward professional providing reward solutions, interim management and consultancy.

Robert is experienced in working across multiple sectors (including public listed, private equity, commercial, financial, non-profit, and charity).

Robert has deep subject matter reward experience in corporate governance, executive reward, remuneration committees, reward strategy, reward policy, annual bonus, long-term incentives, transformation and change, corporate actions, mergers and acquisitions, and restructuring.

Robert is experienced in stakeholder management working closely with Chairs and executive directors including CEOs and CFOs, non-executive director members of remuneration committees, members of executive committees including business unit CEOs/Presidents, senior HR business partners and other line executives, senior management in other organisations, outside specialists and advisers, and investors.

Robert Head Corpgro

Jane Allen

Lead Consultant

Jane has over 30 years of Reward experience within listed multinational organisations and consultancy environments.

Her expertise covers Total Reward (strategy and programmes), benefits & wellness, pensions, executive compensation, Remuneration Committee support, annual and long-term incentives, VCPs (value creation plans), M&As and restructuring.

Jane has successfully established reward teams and best practices for all key reward processes, leading on complex local and international issues across UK and US listed, family owned, and PE backed ownership structures.

She has a keen interest in ESG and how this can be reflected within Executive Pay to align with the long-term sustainability of businesses. 

Jane is a Fellow of the Pensions Management Institute and a Chartered Insurer. She is an independent Trustee for The Economist Pension Plan.

Damian Carnelll

founder director

CORPGRO is a reward consultancy specialising in executive incentives particularly those connected with growth; and ESG.

Damian has extensive experience advising leading companies on all aspects of executive compensation and equity plans. He was previously with Willis Towers Watson, Aon, and Ernst and Young. 

Damian’s extensive experience in executive compensation and equity plans means he is fully familiar with Corporate Governance norms, institutional shareholder views and proxy voting both advisory and binding.

Damian Carnell Corpgro