At this point, Dodd-Frank requires that banks report on their pay and performance alignment.
FORBES: Lessons Learned in the Aftermath of the Banking Crisis
With relative TSR, companies can have confidence that the plan captures something that investors care about, and that the plan is likely to produce good pay and performance alignment.
As companies contemplate how they will satisfy investor and SEC requirements, they will be well served if they put themselves to a three-pronged test: (1) Are our programs and goal-setting processes geared toward pay and performance alignment? (2) Do our decision-making processes and actions around executive compensation drive alignment? (3) Does our firm have a culture that actually values alignment?
Achieving performance and pay alignment, where pay goes up when performance goes up, and vice versa, is a mandate from most investors these days.
Fair Pay, Fair Play: Aligning Executive Performance and Pay, which explores how companies can achieve better performance and pay alignment.
She is the author of Fair Pay, Fair Play: Aligning Executive Performance and Pay, , which explores how companies can achieve better performance and pay alignment.
Due in part to increased investor scrutiny on the alignment between pay and performance, consulting on pay, and in particular, on executive compensation, the world around consulting has become more complex.
The role of HR is to direct and assure desired behaviors, so as to maximize the alignment between strategy and business performance, and to assure consistency across work practices.
Moreover, if the relationship between performance and pay is weak, how can they identify and fix any alignment issues up-front, before these issues become apparent to investors as they cast their Say on Pay votes?
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