We all know effective communication when we see it. And we can quickly point out the ineffective. Examples are everywhere in cryptic emails, indecipherable legal documents or poorly-written advertising.
Our recent survey on The New Normal of Annual Compensation Disclosure explores what public companies are doing to ensure the external communication on their executive compensation plans meets the needs of stakeholders.
In other words, how are they making them effective?
Let’s go one step further and define exactly what it means for these complex documents to be “effective.” The best CD&As – those that clearly articulate all facets of an executive pay program and build the case for how and why it was constructed – have several things in common. They all:
- Clearly state the philosophy, objectives and decision-making processes of the Compensation Committee;
- Tell a story that connects the business and leadership strategy to the compensation plan;
- Proactively address the concerns of multiple stakeholders including regulatory bodies, institutional and retail investors, proxy advisors, media, employees and the general public; and
- Present this information in a relevant, useful and easily-understood format.
It’s a logical leap to say effective communication leads to greater understanding. Isn’t that always the goal in business writing?
