The role of the CEO and executive teams is changing. They are no longer just leading a business. As society expectations of corporations’ shift, executives find themselves leading an integrated community of employees, partners, investors and those acting on behalf of significant and growing environmental and community needs.
The definition of success for organisations and their executives has changed, but the compensation philosophy by which executives are paid has not kept pace. There is a growing disconnect between executive and employee pay. And while many organisations speak compellingly about how they prioritize various non-financial measures of success, total shareholder return remains the main criteria in determining executive pay.
We are rewriting the playbook. Championing pay programs that are fair, simple, clear, trusted, and reflective of a contemporary definition of the roles and responsibilities of your leaders. So, you can attract the right talent, reward the right behaviours, and align them with your purpose and goals.
Partnering with The Aspen Institute Business & Society Program, we have developed the Modern principles for sensible and effective executive pay.
The Modern Principles for Sensible and Effective Executive Pay are the product of two years of research and constructive dialogue with scores of individuals including board directors, experts in governance and investment, leading executive pay advisors and scholars. Through this process we developed a thorough understanding of the broad spectrum of perspectives about what works well, what doesn’t, and where there are opportunities for better design and decision-making about executive pay, especially in public companies.
The goal of this report is to stimulate thoughtful dialogue among those responsible for the design and oversight of executive pay programs, and to elevate the need for clarity, alignment with key goals, integrity, and, especially, to achieve two objectives rarely considered: simplicity (avoiding excessive complexity), and fairness. These five principles offer a holistic and commonsense perspective on executive pay at a time when societies demand it more than ever.