Shareholders are demanding a regular dialogue about executive pay – and not just with the CEO and/or management, but with the Directors who are accountable for making pay decisions. In addition to crafting the narrative for the CD&A and preparing for Say on Pay votes, companies need a strategy for conducting effective, year-round shareholder outreach beyond required proxy disclosures.
This article discusses some battle-tested guiding principles for developing clear and meaningful communication of executive pay programs:
- Link business and leadership strategy to pay philosophy
- Highlight performance results and resulting pay outcomes
- Be transparent about responses to shareholder feedback
- Agree that clarity trumps pride of authorship
- Strike a balance between compliance and marketing
