Remuneration committee

Rewarding executives requires informed judgement. Remuneration committee members do not need expert knowledge, but they do need data to make informed decisions on levels of remuneration, on the link between remuneration and performance, and on the structure and cost of all elements of the executive package.

Remuneration committees need to have a thorough understanding of their company and the forces that shape directors’ remuneration.

REMUNERATION COMMITTEE

Supporting the Remuneration Committee with its remit

Remuneration Policy

  • Business Model
  • Corporate Purpose and ESG
  • Markets and positioning
  • Competitor analysis
  • Governance comply or explain
  • Share Ownership guidelines
  • Share holder consultation

Remuneration Implementation

  • Market benchmarking
  • Pay mix and incentives design
  • Pension and other benefits
  • Business plan/budget
  • Sustainability agenda
  • Impact of the wider scene
  • Special needs for new hires and on share price fall
  • Bespoke incentives for ventures, CDU, and M&A

Remuneration outcomes

  • Assessing observed results
  • Use of discretion and judgement
  • Adjustments to outcomes or targets
  • Use of malus and clawback
  • Drivers of the unexpected
    • Capital changes
    • M & A
    • ESG and the wider scene

Remuneration Reporting

  • DRR drafting
  • Investor views and consultation
  • DRR vote outcome and response
  • Revisions to practice or policy
  • Directors Remuneration Report disclosures includes consistency with Strategic report and Sustainability report.

REMCO REMIT:   PLEASING ALL OF THE PEOPLE - ALL OF THE TIME

Chairing the Remuneration Committee of a listed company is complex and challenging. The decisions are vital to the company’s success, but they are highly visible and sometimes controversial as seen from the deep backdrop of corporate governance and societal norms.

A minimum need is getting the committee annual cycle settled early. There is also the longer policy cycle and the fast-moving fields of ESG and corporate governance expectations to be considered as well. This takes time and deft stakeholder sensitivity.

Aside from all that, the business will throw extra items into the mix. New capital, M&A or disposal, new hire needs of an odd nature, a good/bad leaver assessment and so on.

In addition, too, the overarching ask is for the committee to be aware of, and sensitive to, the wider scene, both in framing proposals and assessing outcomes.

Judgement is expected, discretion is permitted but much care is needed. Adjustments to outcomes are seen, adjustment to targets less so – other than on a capital event like a rights issue.

  • Adjustment
  • Judgement
  • Discretion
  • Malus and Clawback

Outwardly similar, but often the most fraught areas of the committee’s role.

Shareholder consultation had a strong role too; for items of true substance and then genuine listening is a must. Consultation is neither a rubber stamp, nor is it a decision outsource mechanic.

Done well executive compensation adds huge value. While some are dissatisfied with the process, they have yet to advance a good alternative. 

So, it may be like Churchill said of Democracy:

“No one pretends that Democracy is perfect….Indeed, it has been said that Democracy is the worst form of Government, except for all those other forms that have been tried.”
  (11 November 1947)

Setting remuneration policy graphic
Approving remuneration outcomes graphic

bec.bostock@corpgro.com

07989 337118

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