Evolving “Compensation Committees”: What’s in a Name?
A memo from Willis Towers Watson says that compensation committee names & charters are starting to reflect issues that investors say they care about. Here’s some stats:
– Nearly 40% of the S&P 500 (192 companies) currently refer to the committee responsible for executive compensation oversight as something beyond just the “compensation committee”
– Over half of the companies require committees to maintain oversight of broad-based compensation programs and benefits
– One-third of the companies have given the committee diversity and inclusion program oversight
– Only 14% of the sample had oversight of employee culture, employee relations and engagement, but when the compensation committee’s name was broadened toinclude additional responsibilities, these charges are included in charters at a rate six times higher than at companies using the traditional term of compensationcommittee (24% versus 4%)
The memo goes on to note that in the last 10 years, only 9% of companies have changed their name to reflect oversight of human capital issues. However, the rate of change is accelerating: 26 companies changed their name from 2016 to 2019, compared to 11 from 2012 to 2015. We have lots of resources about committee responsibilities & trends in our “Compensation Committees” Practice Area.
-Liz Dunshee, CompensationStandards.com October 24, 2019
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