Executive compensation has become a flashpoint issue for board members, institutional investors, regulators, and the media. This program helps committee chairs and members design more effective compensation programs that not only tie business strategies to company performance, but also motivate top executives and valued employees. You'll also gain new strategies for meeting investor expectations as the regulatory climate evolves.
What You Can Expect
Develop a Strategic Role for Your Compensation Committee
Today's stricter regulations and heightened investor vigilance have added to the complexities of executive compensation. As a result, compensation committees must balance the often-competing tasks of attracting and retaining key talent, adhering to new government rules, and navigating public sentiment.
Designed for board members and senior executives who participate in compensation planning, this program examines the characteristics of a well-functioning compensation committee and the close relationship among compensation plans, employee motivation, and long-term value creation. The program will help you determine how best to promote strategic success in your company through well-developed compensation and reward systems. These include not only designing better incentive schemes, but also understanding subjective and objective performance measurement systems, the role of culture, talent management, and succession planning. As a participant, you will learn how to adapt your compensation strategy's structure and process to better reflect market demands
Develop New Frameworks to Improve the Effectiveness of Your Compensation Committee
This board leadership program focuses on the design of compensation plans and the process that compensation committees should use to develop practices that link the rewards for executive performance to company goals. Through analysis of real-world situations, you will learn how to:
- Design compensation plans that best fit your business strategy
- Compare and contrast the merits of alternative compensation plans
- Apply relevant methodologies and metrics to evaluate CEO performance
- Ensure that the compensation structure promotes the desired corporate culture
- Assess the risks that can be created by certain incentive structures
- Develop better tools for benchmarking performance and compensation
- Determine the appropriate peer group for evaluating performance
- Identify the risks of cookie-cutter solutions and external ratings systems
- Gain investor buy-in on compensation plans
- Craft a best-in-class compensation discussion and analysis (CD&A) report
- Get the best from your board's compensation consultant
- Investigate current regulatory issues such as "say on pay"
- Explore the latest hot button issues and trends in executive compensation
- Examine the best practices in director compensation
YOUR COURSE OF STUDY
The intensive, decision-oriented curriculum uses a blend of current case studies, small group discussions, and interactive faculty lectures on best practices. This rigorous format allows participants to learn how best to excel in the core responsibilities of compensation committees and be alert to new and emerging regulatory and market issues. Focused on developing actionable frameworks that are relevant to compensation committees, the program explores key questions in the following critical areas:
Designing Executive Compensation with a Strategic View
- How can you structure your compensation plan to support your company's long-term strategic objectives?
- What factors motivate senior executives—and what role does compensation play in this motivation?
- What characteristics define compensation plans that are both motivating to executives and acceptable to shareholders?
- How can you get succession planning right and hire the right CEO?
Designing an Effective Compensation Plan
- What elements of compensation plans will be most effective in achieving the company's strategic objectives?
- How can you choose between alternative incentive programs?
- How should compensation committees assess the value created by the CEO and management team—and how do you decide how much of that value should be shared with management and the CEO as compensation?
- How should compensation plans relate to performance evaluation practices for the CEO and other top executives?
- What are the risks being created by your compensation program?
- How is your compensation scheme affecting corporate culture—and what kind of compensation scheme will promote the culture you wish to create?
- How do you create the right peer group to benchmark CEO performance?
- How do you determine the pay for directors?
Designing and Implementing Compensation Committee Processes
- What role should the compensation committee play in determining CEO compensation, designing compensation plans for other senior managers, and approving performance targets and levels of compensation?
- What does an effective process for committee activities look like—and how should compensation consultants, the CEO or his or her representative, and the senior human resources officer be involved in the process? Also, how should the committee relate to each of these players?
- How can compensation committees ensure an effective CD&A report?
Who should attend
Compensation Committees: New Challenges, New Solutions is intended primarily for directors on boards of large public companies who serve as chairs or members of compensation committees and for senior corporate executives. Bank directors, chief executive officers, directors of human resources, investors, legal professionals who help structure employment contracts, and regulatory officials charged with implementing legislation also are encouraged to apply.
To foster teamwork and maximize the learning impact, HBS encourages attendance by several representatives from a given organization.