The compensation committee: what's in a name?

Author:England, John
Position::SPECIAL FOCUS: EXECUTIVE COMPENSATION 2016 REPORT
 
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Have you ever wondered whether the compensation committee name implies anything about its duties and responsibilities, and whether there are any corporate governance implications regarding the board's oversight of broader human resources issues beyond executive compensation?

To shed some light on the answers to these questions, Pay Governance accessed committee charters with responsibility over executive compensation for all S&P 100 companies as of June 30,2016. On the assumption that committee charters accurately capture duties and responsibilities, we are able to see what else is included in the compensation committee's remit, and whether the committee's name is a hint as to what those responsibilities might include.

Findings

  1. Names of "compensation committees"

* Twenty-seven different names are used for board committees with responsibilities over executive compensation.

* The most common committee name is "Compensation Committee." Forty-seven companies in the S&P 100 use this name. Of course, that also suggests that the majority of companies call their board committee with responsibility over executive compensation something else.

Compensation Committee 47 Other Names 53 Note: Table made from pie chart. Other 17 Management Development & Compensation 6 Leadership Development & Compensation 3 HR & Compensation 6 Human Resources 3 Compensation & HR 3 Compensation & Management Development 6 Compensation & Leadership Development 4 Compensation & Benefits 5 Note: Table made from pie chart. B. Charter Duties and Responsibilities

* All 100 have duties and responsibilities over executive compensation, generally described as "... to discharge the responsibilities of the Board of Directors relating to compensation of the Company's executives and to produce an annual report on executive compensation for inclusion in the Company's proxy statement."

* For 17 of the S&P 100, executive compensation responsibilities are where duties begin and end.

* For the 83 S&P 100 companies with board committees having broader responsibilities than just executive compensation, duties also include:

Director Compensation 43 Succession Planning 43 Benefit Plans 41 Talent Management 25 Diversity and Inclusion 21 Retirement Plans 12 HR Planning 6 Other 6 Recruitment 5 EEO 4 Retention 4 Note: Table made from bar graph. C. Does the committee name imply anything?

Whether the S&P 100 board committee responsible for executive compensation is called...

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