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Compensation committees are fine-tuning annual bonus plans to more closely pair executive pay with performance. A review of 2015 proxies shows that boards made small adjustments to underlying performance metrics, rebalanced the weighting of metrics, and altered the size of bonus opportunities.
Overall, Jan Koors says she sees little homogeneity in the types of changes companies are making to their annual bonus plans.
“What we’re seeing is companies continue to try to fine-tune that pay-for-performance relationship,” saysKoors, who is Managing Director and head of Pearl Meyer's Chicago office. “Companies want to be able to demonstrate in public disclosures that there is a strong link between company results and the payout to senior executives.”