To kick off 2022, here’s a summary of Longnecker’s blog covering upcoming compensation strategies & emerging trends – for executives and the broader workforce:
– ESG: “As public pressure and changing cultural norms continue to evolve, ESG looks to stay as a new benchmark criteria for today’s business leaders. Specifically, institutional investors are holding company operations accountable for their effects on the environment and their surrounding communities. Surveys show that already, 45% of FTSE 100 companies incorporate ESG metrics in their executive pay programs.” ESG is a global phenomenon, and it’s also here to stay in the U.S. Get ready to see ESG metrics incorporated into companies’ incentive programs.
– Compensation Clawbacks: Liz recently blogged about McDonald’s successful clawback – and though there hasn’t been much new activity after the SEC comment period for the clawback proposals closed, companies should review their clawback policies and how the proposed rules might work with existing and upcoming incentive plans.
– Proxy Disclosures: Longnecker notes that “in addition to Human Capital Management, CEO Pay Ratio and other disclosures, Perquisite disclosures continue to be an enforcement priority for the SEC.” You can also check out our handy checklists on perks disclosure and other executive compensation disclosures as you start drafting.
– Flexibility & Remote Work: Longnecker suggests that “remote work options and flexibility are emerging trends that will continue to gain momentum in 2022 as employees place high value on these benefits.” Flexibility may also promote employees’ mental health, which is another factor in human capital management.
– Variable Compensation to Reward Top Performers: Longnecker projects “an upward trend in variable pay strategies, especially at the employee level going into 2022” and flags that variable pay programs and spot awards are “proven methods to improve retention at both the employee and executive levels.”
– Mitigating Pressure on Compensation Budgets & Rising Wages: Longnecker notes that employers can mitigate the dual issues of struggling to fill open positions and raise base salaries by “retain[ing] current employees, offer[ing] learning and development programs to fill positions from within, tak[ing] a holistic approach to total rewards and look[ing] beyond compensation.”
-Emily Sacks-Wilner, CompensationStandards.com January 10, 2022