Helping Boards Meet Their Fiduciary Responsibilities Efficiently and Effectively

Aon Hewitt executive compensation consultants work directly for Board Compensation Committees in the execution of their fiduciary responsibilities. Here, we outline the operating model we use as we work with these Committees to manage their organization’s compensation plans.

What Compensation Committees Require
Committees need independent advice that provides shareholder and enterprise value – and ensures their programs are delivering the intended results. This advice needs to be based on sound data and research, and should include a broad perspective balanced with industry-specific insights.

These Committees also require:

• Ability to translate the organization’s business and leadership needs into specific, value-added plans and programs.
• Up-to-date technical understanding, ensuring all programs reflect “best practice” and that they are effectively designed, managed and defensible.
• An audit trail illustrating consistent application of the enterprise’s operating principles and values.
• Open communication and insights that help shape decision-making and keep programs operating effectively on an ongoing basis.
• Assistance in managing the Committee’s work effectively throughout the year.

Aon Hewitt can help you directly address all these requirements, by providing you with a team that will partner with you, provide you with up-to-date, relevant market and trend data, and provide you with on-going guidance on new developments.

Solutions You Can Trust
To fulfill these requirements, Hewitt commits to providing:

• Analysis of peer group performance and trends to inform decisions and goal setting.
• Annual updates of current trends and potential new regulations.
• Ongoing client education on new laws, regulations and developments.
• Communication with the Committee’s Chair before, after and between each meeting to review agenda items, establish meeting “to do’s” and discuss issues.
• Technical support in preparing all disclosures (CD&A; proxy; 409A calculations; share pool usage, etc.).
• An annual update of the Board’s compensation program to ensure it supports enterprise goals and Board member retention.
• Annual pay-for-performance audits that show the comparative value of the organization’s performance and compensation paid.
• Tally sheets that show the total value of cumulative compensation paid to key executives over time.
• Special studies or analysis, by request, to further explore an issue or prepare for a program change.
• Insight into the degree of stretch and complexity for annual and long-term incentive (LTI) goals.

This working collaboration results in an executive compensation process that provides sound governance coupled with openness and transparency. The collaboration also assures that open communication is maintained between the Committee, management and other Board members throughout the process; and that plans can be effectively audited, questioned, reviewed and enhanced to add value and produce the intended results.