The media spotlight continues to hover over the issue of executive pay. The wealth of new rules and guidelines mean companies are faced with the increasingly delicate task of creating an incentive package that is aligned with shareholder value, while retaining and motivating executives.
The frequency with which companies re-design their executive reward programmes, with long-term incentives posing a particular problem, testifies to the difficulty of getting them right.
Fuelling this issue are new accounting rules, changes to pensions tax legislation the emergence of the pensions regulator and the current governance environment. Ironically, while all have been established to aid rather than thwart companies' efforts, these and other factors have lead to incentive programmes that do not meet the needs of either shareholders or executives.
Reward is a key tool for attracting, retaining and motivating those individuals who will add value to the business. Getting it wrong can mean loss of key talent, demotivated and disengaged executives or reward proposals that are not accepted by shareholders. Striking the right balance while retaining a focus on the needs of the business is all important.
To make compensation and benefits work more effectively for both executives and shareholders, companies and remuneration committees need to design and test new programmes in the context of the total package.
We have a proven track record in the design and implementation of executive reward programmes, working with 40% of the FTSE-100. Effective reward planning can help to recruit, retain and motivate key talent, and deliver value for money.
The distinguishing features of our approach are the wealth and depth of expertise and our business-focussed approach to reward design. Our compensation, tax, legal and actuarial experts work with statisticians, data analysts and modellers who test assumptions, identify implications, and track results. It is this combination of thought leadership and robust analysis that adds value for the organisations we work with.