Executive Compensation and Corporate Governance Consulting
Technical Capabilities and Resources

Aon Hewitt maintains technical capabilities and resources that are unparalleled in scope to support your executive compensation needs. These capabilities serve as the foundation of analysis and recommendations, and they are of the highest quality.

Corporate Governance
We help clients develop executive compensation philosophy, director compensation, and Compensation Committee charters. In addition to this development we also provide:

• Director education
• External market and legislative updates
• CD&A and Proxy development
• CEO evaluations
• Committee evaluations
• Tally sheet preparation
• Pay/performance analysis
• Disclosure review and analysis
• Testing vs. Risk Metrics models for acceptable practices

Communication of Executive Compensation
We help clients develop the right messaging to communicate their plans to across internal and external constituents, through:

• Communication strategy development
• Individual participant statements
• Shareholder education materials
• Plan documents

Program Design
Our design capabilities are comprehensive – from full total rewards strategy and design down to individual contract analysis. Other areas include:

• Equity and cash based long-term incentive design
• Performance metrics analysis and selection
• Employment contract analysis
• Change in control & severance plan design and costing
• Non-qualified SERP and restoration plan design and costing
• Deferred compensation plan design/costing
• Total Rewards architecture and monitoring
• Peer group selection and analysis
• Pay/performance analysis

Corporate Change and Transition
We have helped a wide variety of companies conduct plan design and integration work for spin-offs, divestitures and public offerings. This work often includes:

• Equity design and transition from parent company’s plans
• Bankruptcy planning, testimony, and emergence planning and design
• Global or domestic restructuring

Executive Compensation and Analysis
Our technical resources are among the best in the world, and regularly perform:

• Custom peer group selection and performance/pay analysis
• External market studies and job pricings
• Competitive market valuations for salary, bonus, long-term incentives, benefits and perquisites
• Pay and performance alignment
• Best practice and emerging trends research
• Outside Director compensation design/analysis
• Black-Scholes, Monte Carlo, binomial and FAS 123R calculations and support
• Equity grant run rate and dilution analysis
• Tally sheet preparation
• Interactive modeling of proposed compensation programs and business strategy

Technical Support Services
Other technical support we provide clients includes:

• Special program design, implementation and communications
• Long-term incentive plan design and shareholder approval
• Share pool analysis and usage
• Internal revenue code section 162m assistance
• 409a compliance and analysis
• Plan documentation and award agreements
• Tax, accounting and securities law analysis and excise tax calculations
• Ongoing research and tracking of all legislative and regulatory changes

Pay and Performance Alignment
Aon Hewitt performs pay and performance alignment evaluations, and we can identify “performance” definitions for use at all levels. Alignment work often includes:

• Annual and long-term metrics selection , hurdle selection, and modeling
• Pay element mix selection to ensure consistency with total rewards strategy
• Company differentiator identification and the success factors for inclusion in reward plans
• Review of checks and balances to reward structure, goal setting and pay-out curves
• Annual risk assessment of compensation programs, metrics, governance practices and outcomes