Companies need to take control of how they present the workings of and rationale for executive pay programs to their various constituencies. Rather than relying on text-heavy CD&As filled with boilerplate, they must clarify exactly what “pay-for-performance” means in the context of that business and why that approach is responsible, proportionate and directly supports the specific strategies that drive results and create shareholder value. For many organizations, this also will require rethinking how they currently communicate about pay internally to their employees.
Among the issues discussed in this Q&A interview:
- What factors should companies consider in crafting communications around pay-for-performance?
- What audiences should companies be addressing?
- What mediums and methods should be used?
- Which internal departments should be involved?
- What do companies habitually get wrong about communicating compensation?
- How can companies best prepare for the SEC’s proposed pay ratio disclosures?
- Should some aspects of compensation be deemed “out of bounds” for communicating?
- What precautions should be taken in using social media as part of a compensation communications strategy?
