Set Goals That Meet Stakeholder ExpectationsZoom inDownload PDF
In recent years, no subject in executive compensation has gotten greater focus than the shift toward formulaic, performance-based incentive plans. The advent of annual say on pay, coupled with the increasing attention of institutional investors and proxy advisers, has accelerated this trend and now made this practice the norm. The focus has thus changed to ensuring that the goals underlying such programs are sufficiently rigorous and robust. While goal-setting has been a perennial challenge for issuers, the new expectations have raised the bar for “getting it right.”
With so much at stake, what is a company to do? The solution is within reach if companies follow three major steps:
- Identify and respond to stakeholder expectations
- Satisfy constraints imposed by organizational capabilities and the business environment
- Remain cognizant of benchmarks and standards of success
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