Center Quick Survey Results: Compensation...

• Survey on the expanding remit of the Compensation Committee and current practices on selecting a compensation consultant. Data on the expanding responsibilities of the Compensation Committee, especially in the areas of human capital management, talent strategy, and diversity, equity & inclusion (DEI). The survey also covers consultant costs and processes for competing consultant services.

See full results and analysis here.

Survey findings include:

Compensation Committee Charter

• Approximately two thirds of respondents have formally expanded the role of the compensation committee by either expanding the charter (35%) or the charter and committee name (32%).
  
  
  • Nearly all (95%) of these companies expanded the remit to cover human capital management and talent strategy while 80% cover DEI.
    
    
    • With regard to HCM and talent, the most common items included in the charter were executive succession and pipeline.
      
      
    • With regard to DEI, there was a range of responsibilities from overseeing DEI for the entire company to just focusing on diverse pipelines for executive talent.
      
      
  • Almost half (44%) of the committees with an expanded purview discuss the additional items on an annual basis, while approximately 20% discuss them at each Committee meeting.
    
    
    • Comments indicated that even if there is a set schedule for consideration, the Committee will address issues as needs arise.
      
      
• For companies that have not expanded the Compensation Committee’s area of responsibility, nearly three quarters (73%) disclosed that many of these concerns are handled at the full board, while 38% indicated these concerns are handled by other board committees such as Nom/Gov or a special ESG committee.

Compensation Consultant Fees and Practices

• Companies continue to be split on hiring separate consultants for the committee and management, with 59% having two consultants and 40% having one (with no plans to change).
  
  
• Over half of respondents (59%) indicated the company paid between $150,000 -$300,000 for regular services.
  
  
  • 20% disclosed costs between $50,000 - $100,000 while 18% paid between$300,000 - $500,000.
    
    
• A small majority (55%) disclosed that fees did not change compared to 2019 while 30%saw an increase.
  
  
• An almost even split requested special projects from the consultant in 2020. For those that did, costs were usually either below $50,000 (44%) or between $50,000 and$100,000 (42%).
  
  
  • Comments highlighted special projects including compensation benchmarking, peer group analysis, CD&A review, and shareholder engagement strategies.
    
    
• More than three quarters of respondents (78%) evaluate the consultant’s performance on an annual basis. In a developing trend, 16% of companies now maintain a general practice on rotating the consultant (either through RFP or considering whether to RFP) on a regular basis.

Thank you to all Center members who took the time to respond to this survey!