Equitable Incentive Compensation Decisions During Turbulent Times

Webinar

Historical norms for incentive plan decision making will be all but impossible to apply in 2020 and possibly beyond.

The majority of calendar year companies set short- and long-term incentive metrics and goals and made stock grants before the impact of the COVID-19 pandemic hit the United States. Fiscal year companies are either further into their fiscal years or signed off on goals after the initial impact was known.

Whether your company’s performance benefited from or collapsed under the new social and economic normal, companies’ crystal balls on what potential performance for remainder of the year are cloudy.

There are many questions around what we should be paying for this year:

  • The financial and shareholder return targets agreed to?
  • What about shifting short-term priorities?
  • Do we consider stakeholders other than shareholders?
  • How much pay is fair for the absolute performance delivered and do we adjust for things beyond management’s control?
  • What will shareholders/ shareholders advisors think?
  • How do we help our compensation committee exercise judgement in a thoughtful way through a process they will feel good about?

The advice early in the pandemic was to wait for more certainty in the economy and lower share price volatility. Now it is time to begin the decision-making process.

This session provides:

  • A framework for incentive decision making
  • A staged process for leaders and the compensation committee
  • Potential solutions that fit different company scenarios

The conversation will start with where your company is, how the pandemic has changed potential performance and short-and long-term prospects.

The decision-making framework will address:

  • Key principles for 2020 incentive pay
  • Criteria for setting the order of magnitude of payouts (% of Target)

The staged process will outline agendas for 3-4 meetings.

Potential solutions will be categorized by what works best in the ranges of situations companies will be in.

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Details

On-Demand

Access: 90-Day Access | On-Demand Event Code: WEBINAR-20200723-PLAYBACK

Recorded Event

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Presenters

Richard Harris

Partner Reward Solutions | Aon

Richard Harris is a Partner and Senior Consultant at Aon, specializing in Executive Compensation. With over 30 years of experience, he primarily consults with compensation committees and executive management.

Mr. Harris also leads the Performance-Pay Team. This team assists compensation committees and management in choosing performance metrics and setting performance goals for annual and long-term incentive plans as well as evaluating the degree of alignment of pay-to-performance relationships. This group has also developed Aon’s methodology for assessing the risk implications of compensation plans and for using the relationship of “earned” pay relative to performance to identify potential areas for improving total program design.

His work with clients outside of the pay to performance area has included developing executive compensation philosophies, evaluating plans in light of the philosophies, designing annual and longer term performance plans; assisting with understanding accounting, tax, regulatory aspects of executive compensation, and guiding companies through the compensation governance assessments of investors and investor advisors. He has also developed employment contracts, special severance, and retention programs and director compensation plans.

Richard received a Master’s in Management from Northwestern University’s Kellogg Graduate School of Management and a B.S. in Accounting from the University of Illinois. Prior to joining Aon, Richard has had senior executive compensation advisory positions with Mercer Human Resource Consulting and KPMG.

Dan Kapinos

Partner, Rewards Solutions | Aon

Dan Kapinos is a Partner in Aon’s Rewards Solutions business and serves as the Head of Aon’s Equity Services Team, which provides expertise, service and advice on all things related to equity compensation to over 900 companies globally. Dan is a frequent speak and writer on a variety of compensation topics and has held many industry positions including President of the NASPP Philadelphia Chapter and member of the CEP Institute’s Curriculum Committee. Currently Dan sits on the NASPP’s Executive Advisory Committee.

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