While adopting pay-for-performance executive compensation models has been a popular objective for Boards and shareholders for several years, actually implementing such systems has proven more difficult. 2014 is proving to be a watershed year for pay-for-performance, however. Tactics such as the inclusion of performance shares tied to specific goals in the executive pay mix, raising the bar for short-term incentive payouts, and increasing the ratio of overall long-term to short-term incentives, are putting more of an emphasis on meaningful performance outcomes.
Companies are also responding to SEC pressure to include more explanation and analysis of executive compensation in the required Compensation Discussion & Analysis (CD&A) section of proxies, increasing transparency to shareholders. Additionally, many companies are working to strengthen internal communications about pay plans
How is your company adopting pay-for performance for your executive compensation plans? Have you changed internal/external pay plan communications to provide greater transparency into evolving compensation models?