HomeWebcastCrafting and Implementing an Effective Executive Compensation Strategy
Online CLE Executive Compensation CLE

Crafting and Implementing an Effective Executive Compensation Strategy

Live Webcast Date: Tuesday, November 19, 2019 from 3:00 pm to 4:30 pm (ET)
Executive Compensation CLE & CPERecording

Online CLE Executive Compensation

Join us for this Knowledge Group Online CLE Executive Compensation Webinar. A well-developed executive compensation program can be a driving force for companies in increasing employee retention, engagement, and performance. However, with the continuously evolving economic challenges and demands, and along with the changes in implementation and disclosure of executive compensation, having an effective compensation plan isn't enough for the company to be sustained. It has to be constantly assessed, developed, and modified in order to fit the needs of the company and employees over time.

It is, therefore, important for companies to remain proactive in crafting and implementing an effective executive compensation strategy in order to avoid potential risks and meet specific goals for the company and its employees.

In this Webcast, a seasoned panel of thought leaders and professionals brought together by The Knowledge Group will provide and present to the audience an in-depth analysis of the recent trends, and developments as well as the practical strategies and best practices in crafting and implementing an effective executive compensation program. This webcast aims to help you meet the growing regulations imposed on businesses and the continuously intensified area of law.

Key topics include:

  • Recent Trends and Developments in Executive Compensation
    • The Surprisingly Low Alignment of CEO Pay and Performance
    • Three Widely Accepted Pay Practices that Undermine Alignment
    • ISS and Economic Value Added (EVA): A Missed Opportunity
  • Regulatory Updates and Notable Court Rulings
  • Common Risks and Pitfalls
  • Practical Strategies and Best Practices
  • What Lies Ahead

Agenda

SEGMENT 1:
Stephen F. O'Byrne, President
Shareholder Value Advisors Inc.
  1. It’s important to measuring and benchmarking pay for performance.
    1. Alignment of CEO pay and performance is surprisingly low: relative TSR explains only 10% of the variation in relative realizable pay for S&P 1500 CEOs.
    2. About 20% of companies do a good of aligning pay and performance and controlling cost.
  2. There are three pay policies that undermine the alignment of relative pay and relative performance.
    1. Competitive pay policy (i.e., 50th percentile pay regardless of past performance)
    2. Paying for industry performance
    3. Weak mechanisms to link cumulative pay and performance
  3. There is a simple pay plan with annual grants of performance shares that provides a perfect correlation of relative pay and relative performance.
  4. The effort of ISS to use EVA to improve performance measurement is a missed opportunity
    1. EVA improvement is critically important: it’s one component of the investors’ excess return, but
    2. ISS is ignoring the other two components of the excess return (i.e., expected improvement and the unexpected change in future growth value)
    3. The ISS methodology will lead to rankings that are inconsistent with investor returns: it will over-value turnaround companies and companies that boost current EVA at the expense of future EVA improvement (e.g., boosting margins at the expense of growth) and under-value growing positive EVA companies that get part of their return from an increase in future growth, not current EVA improvement.

SEGMENT 2:
Joshua Bright, Principal
Pay Governance LLC
  1. Peer Groups
    1. Role/purpose
    2. Principles
    3. How to incorporate peer data from peers that are too big/small or specific to a business unit (but not the overall company)
  2. Developing an Effective CD&A
    1. Does a letter from the Compensation Committee make sense?
    2. How to structure an Executive Summary
    3. Overall messaging and flow
  3. Shareholder Outreach
    1. When and why?
    2. Process and who participates

SEGMENT 3:
Arnaldo Ulaj, Principal
ClearBridge Compensation Group, LLC
  • What to consider when designing an effective Annual Incentive Program “AIP”, including:
    • Key design decision points / considerations, including:
      • Metrics
      • Payout leverage
      • Goal-setting process
    • 2019 broad market trends on AIP design
  • What to consider when designing a Long-Term Incentive (“LTI”) Plan, including:
    • Key design decision points / considerations, including:
      • LTI vehicle mix
      • Vesting criteria
      • Other design considerations (e.g., share determination approach)
    • 2019 broad market trends on LTI design

Who Should Attend

  • Employee Benefits Lawyers and Consultants
  • Human Resource Executives
  • In-house Counsel
  • Top Level Management

Online CLE Executive Compensation

SEGMENT 1:
Stephen F. O'Byrne, President
Shareholder Value Advisors Inc.
  1. It’s important to measuring and benchmarking pay for performance.
    1. Alignment of CEO pay and performance is surprisingly low: relative TSR explains only 10% of the variation in relative realizable pay for S&P 1500 CEOs.
    2. About 20% of companies do a good of aligning pay and performance and controlling cost.
  2. There are three pay policies that undermine the alignment of relative pay and relative performance.
    1. Competitive pay policy (i.e., 50th percentile pay regardless of past performance)
    2. Paying for industry performance
    3. Weak mechanisms to link cumulative pay and performance
  3. There is a simple pay plan with annual grants of performance shares that provides a perfect correlation of relative pay and relative performance.
  4. The effort of ISS to use EVA to improve performance measurement is a missed opportunity
    1. EVA improvement is critically important: it’s one component of the investors’ excess return, but
    2. ISS is ignoring the other two components of the excess return (i.e., expected improvement and the unexpected change in future growth value)
    3. The ISS methodology will lead to rankings that are inconsistent with investor returns: it will over-value turnaround companies and companies that boost current EVA at the expense of future EVA improvement (e.g., boosting margins at the expense of growth) and under-value growing positive EVA companies that get part of their return from an increase in future growth, not current EVA improvement.

SEGMENT 2:
Joshua Bright, Principal
Pay Governance LLC
  1. Peer Groups
    1. Role/purpose
    2. Principles
    3. How to incorporate peer data from peers that are too big/small or specific to a business unit (but not the overall company)
  2. Developing an Effective CD&A
    1. Does a letter from the Compensation Committee make sense?
    2. How to structure an Executive Summary
    3. Overall messaging and flow
  3. Shareholder Outreach
    1. When and why?
    2. Process and who participates

SEGMENT 3:
Arnaldo Ulaj, Principal
ClearBridge Compensation Group, LLC
  • What to consider when designing an effective Annual Incentive Program “AIP”, including:
    • Key design decision points / considerations, including:
      • Metrics
      • Payout leverage
      • Goal-setting process
    • 2019 broad market trends on AIP design
  • What to consider when designing a Long-Term Incentive (“LTI”) Plan, including:
    • Key design decision points / considerations, including:
      • LTI vehicle mix
      • Vesting criteria
      • Other design considerations (e.g., share determination approach)
    • 2019 broad market trends on LTI design

Online CLE Executive Compensation

Online CLE Executive Compensation

Stephen F. O'ByrnePresidentShareholder Value Advisors Inc.

Stephen F. O’Byrne is President and co-founder of Shareholder Value Advisors Inc., a consulting firm that helps companies increase shareholder value through better performance measurement, incentive compensation and valuation analysis.  His work on measuring the strength and cost-efficiency of top management incentives has been published in the Harvard Business Review, the Journal of Investing, Conference Board Director Notes, the Journal of Applied Corporate Finance and the WorldatWork Journal.  He is the co-author, with Professor David Young of INSEAD, of EVA and Value-Based Management.  He was previously head of the compensation consulting practice at Stern Stewart & Co. and a Principal in the executive compensation practice at Towers Perrin.

Online CLE Executive Compensation

Joshua BrightPrincipalPay Governance LLC

Joshua (Josh) Bright is a Principal at Pay Governance and has been consulting to compensation committees and senior management at public and private companies regarding compensation philosophy, CD&A development, pay competitiveness, short- and long-term incentive plan design and non-employee director compensation for 14 years.

Josh’s clients range from start-ups to S&P 500 companies and span a variety of industries, including: automotive, financial services, hospitality, industrial manufacturing, real estate (focus on lodging) and retail.

Prior to joining Pay Governance, Josh was a Senior Executive Compensation Consultant at Towers Perrin/Watson (now Willis Towers Watson). Prior to his career in executive compensation consulting, Josh worked in the wealth management division of a global financial services company and held his Series 31, 66 and 7 securities licenses. Josh holds a Bachelor of Business Administration in Finance from Western Michigan University

Online CLE Executive Compensation

Arnaldo UlajPrincipalClearBridge Compensation Group, LLC

Arnaldo Ulaj is a Principal at ClearBridge Compensation Group with over seven years of experience in executive compensation strategy and design. 

Mr. Ulaj advises clients across numerous industries in support of business priorities and the creation of long-term shareholder value.  Mr. Ulaj’s technical knowledge and expertise includes evaluating pay-for-performance relationships, compensation benchmarking and incentive plan design.

Prior to working at ClearBridge, Mr. Ulaj worked at FW Cook and prior to that worked at Merrill Lynch Wealth Management.  Mr. Ulaj holds a B.S. in Finance from the Gabelli School of Business at Fordham University.


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Online CLE Executive Compensation

Course Level:
   Intermediate

Advance Preparation:
   Print and review course materials

Method Of Presentation:
   On-demand Webcast; Group-Internet Based

Prerequisite:
   Basic knowledge of executive compensation

Course Code:
   148109

NASBA Field of Study:
   Finance - Technical

NY Category of CLE Credit:
   Areas of Professional Practice

Total Credits:
    1.5 CLE 1.5 NASBA-CPE

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About the Knowledge Group

The Knowledge Group

The Knowledge Group has been a leading global provider of Continuing Education (CLE, CPE) for over 13 Years. We produce over 450 LIVE webcasts annually and have a catalog of over 4,000 on-demand courses.

About the Knowledge Group

The Knowledge Group

The Knowledge Group has been a leading global provider of Continuing Education (CLE, CPE) for over 13 Years. We produce over 450 LIVE webcasts annually and have a catalog of over 4,000 on-demand courses.

Shareholder Value Advisors (SVA) is a consulting firm that helps companies improve performance through more effective business unit incentives.

Effective business unit incentives require (1) a well-designed measure of business value added, (2) accurate estimates of competitive pay and (3) a plan design that achieves the three basic objectives of executive pay: providing strong incentives to increase shareholder value, retaining key talent and limiting shareholder cost.

SVA’s distinctive capability is better measurement.  SVA’s work on measuring business value added isolates management’s contribution to value by adjusting for capital investment, investor expectations and peer company performance.  SVA’s work on competitive pay uses multiple regression models to get more accurate market rates by controlling for position, industry, size, profitability and risk.  SVA’s work on plan design uses a distinctive framework to measure alignment, incentive strength and the company’s pay premium at industry average performance using realizable as well as grant date pay.

Website: http://www.valueadvisors.com/

Pay Governance LLC is an independent firm that serves as a trusted advisor on executive compensation matters. Our work helps to ensure that our clients' executive rewards programs are strongly aligned with performance and supportive of appropriate corporate governance practices.

We assist in developing an overall framework and governing philosophy, which describes the company’s approach to all aspects of pay. We utilize decision-quality data to assist compensation committees in making fully informed decisions.

Website: https://www.paygovernance.com/

ClearBridge Compensation Group is an independent consulting firm providing advice to boards of directors and senior management on the design of effective executive compensation programs with a focus on shareholder alignment, linkage with business strategy, and adherence to strong governance standards.

Our consultants have extensive experience and expertise in executive compensation program design. Our work spans across industries for both publicly-traded and privately-held companies.

Website: https://www.clearbridgecomp.com/

Stephen F. O’Byrne is President and co-founder of Shareholder Value Advisors Inc., a consulting firm that helps companies increase shareholder value through better performance measurement, incentive compensation and valuation analysis.  His work on measuring the strength and cost-efficiency of top management incentives has been published in the Harvard Business Review, the Journal of Investing, Conference Board Director Notes, the Journal of Applied Corporate Finance and the WorldatWork Journal.  He is the co-author, with Professor David Young of INSEAD, of EVA and Value-Based Management.  He was previously head of the compensation consulting practice at Stern Stewart & Co. and a Principal in the executive compensation practice at Towers Perrin.

Joshua (Josh) Bright is a Principal at Pay Governance and has been consulting to compensation committees and senior management at public and private companies regarding compensation philosophy, CD&A development, pay competitiveness, short- and long-term incentive plan design and non-employee director compensation for 14 years.

Josh’s clients range from start-ups to S&P 500 companies and span a variety of industries, including: automotive, financial services, hospitality, industrial manufacturing, real estate (focus on lodging) and retail.

Prior to joining Pay Governance, Josh was a Senior Executive Compensation Consultant at Towers Perrin/Watson (now Willis Towers Watson). Prior to his career in executive compensation consulting, Josh worked in the wealth management division of a global financial services company and held his Series 31, 66 and 7 securities licenses. Josh holds a Bachelor of Business Administration in Finance from Western Michigan University

Arnaldo Ulaj is a Principal at ClearBridge Compensation Group with over seven years of experience in executive compensation strategy and design. 

Mr. Ulaj advises clients across numerous industries in support of business priorities and the creation of long-term shareholder value.  Mr. Ulaj’s technical knowledge and expertise includes evaluating pay-for-performance relationships, compensation benchmarking and incentive plan design.

Prior to working at ClearBridge, Mr. Ulaj worked at FW Cook and prior to that worked at Merrill Lynch Wealth Management.  Mr. Ulaj holds a B.S. in Finance from the Gabelli School of Business at Fordham University.

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