Compensation and Character: Human Capital and Executive Pay: Balance must be found between retaining talent and pleasing shareholders.

• Position: THE CHARACTER OF THE CORPORATION

The approach to executive compensation is in flux for many companies entering 2021. Some organizations fared well or even better than they would have without the crises that included a global pandemic and a push for social and professional equity through social unrest. Other industries took big hits. As the dust settles, it's left to the compensation committee to evaluate how managers performed and compensate them accordingly.

Many corporations set their 2020 compensation plans in February, says Eric Hosken, a partner with Capital Advisory Partners, but by the end of March, the expectations and benchmarks for management in those plans were useless.

"Some committees reset the annual incentive plan," he says, "while others waited to see how the year played out and then applied discretion in considering, 'What goals would we have set had we known then what we know now?'

Directors are really earning their pay in terms of trying to figure out how to balance keeping management teams motivated while being sensitive to the concerns of shareholders.

Looking long term is another way to smooth out any discrepancies between performance and compensation: waiting for the 2018-2020 cycle to finish before reworking comp programs, changing plans for 2021-2023 or waiting even longer to get a clearer view of new circumstances and business recoveries.

In the meantime, many compensation committees are tasked with oversight of human capital issues, which adds an additional dimension to pay plans. This evolution has added to the committee's workload and time commitment, as half of the committee's time may be spent on non-compensation issues.

"Increasingly you see compensation committees renaming themselves as 'the leadership development committee' or 'the organization and compensation committee,' embracing that broader mandate,"...