Adding Value to the Executive Compensation Process
U.S. companies are increasingly affected by the various external influences on executive pay and governance practice. The changing economic and regulatory landscape has challenged management and the board of directors to reaffirm their charge. An experienced advisor can add a lot of value and relieve some of the pressure. At any stage of the business cycle and at any point in time, FW Cook can serve as a valuable partner in balancing competing interests and ensuring that executive pay is aligned with corporate strategy and shareholder value.
Company looking for new perspective
A company’s new or even existing board leadership may want a fresh perspective on their compensation approach for a number of reasons. Perhaps incentive plans aren’t retaining key leadership or the compensation philosophy no longer fits. Possibly the compensation structure is being met with challenges by shareholders. Maybe compliance has become the primary focus and the board wants to better position compensation programs as a tool to further the Company’s strategic plan. Whatever the impetus for a new perspective, FW Cook consultants will take the time to understand your company’s unique strategy and goals and offer thoughtful and value-adding solutions tailored to the specific situation.
Corporate transactions and strategic initiatives
Corporate transactions such as mergers, acquisitions, changes in control, spinoffs and Initial Public Offerings (IPO) affect not only the existing leadership, but also the compensation strategy for the company moving forward. The consultants at FW Cook have the experience to handle the additional complexities involving strategy alignment, compensation plan design, severance arrangements, public disclosures, regulatory and compliance requirements, and shareholder outreach.
Leadership changes, realignment of business strategy or the launch of new business initiatives may cause a change in corporate goals. This presents an ideal time to consider aligning compensation and incentive plans to those new initiatives.
Challenges with Say-on-Pay
We apply a depth of experience when a company’s Say-on-Pay results consistently fall short of expectations by helping to:
- Address a potential pay-for-performance disconnect or a compensation decision that could be viewed negatively by investors
- Intervene on a negative Say-on-Pay vote recommendation by the proxy advisory firms or the dissident view of activist investors
- Recover from a failed or low Say-on-Pay outcome
- Develop a shareholder outreach strategy and communication
- Provide input on the redesign of a compensation program
In the on-going relationship, FW Cook consultants will pro-actively assist company leadership in staying apprised of how their programs and current compensation decisions will be viewed externally year to year, while working to provide tailored solutions that enable compliance and maintain effectiveness.
When change is inevitable, foresight is a strong ally.
Private companies enhancing competitiveness and alignment
Private companies face unique challenges in developing compensation systems that allow them to compete with public companies and create proper alignment between management and ownership. FW Cook consultants have comprehensive experience in designing incentive arrangements and effective compensation strategies that are appropriate for private companies while enabling them to compete at the highest level for talent. We understand the constraints that are unique to the private company environment and apply the same level of objectivity when advising private companies.
Facing challenges in tax-exempt organizations
Tax-exempt compensation programs require specific skills to design and administer. First, many if not most of our tax-exempt clients need to compete with for-profit organizations for top talent. It is important to find the right balance between the need for a high performing management team and maintaining perspective on the organization’s mission and values. Moreover, the risks of examination and assessment of penalties for excessive compensation are significant, with the IRS, various state attorneys general, Congress, and unions actively trying to reduce the compensation of nonprofit executives. To run a successful nonprofit organization in today’s environment, it is critical to have a sound governance process in place and know where your limits are.