Key Questions on the 2024 Compensation Committee Agenda

A recent KPMG report highlights five areas that are top of mind for board directors and business leaders as they examine current talent strategies in light of challenging macroeconomic and political factors, an increased regulatory environment and significant technological changes.

Why it matters? Make sure your compensation committee is focused on the right topics that will  enable them to act as an effective partner in achieving the your human capital and talent goals.

• A strategic focus. Don’t lose sight of the primary purpose of the compensation committee: to ensure compensation programs effectively incentive leaders to deliver outcomes that drive long-term shareholder value. This can be particularly difficult during downturns or uncertain times so maintain focus on selecting the right performance measures and targets that will allow for long-term success despite short-term challenges.
  
  
• Committee scope. Committee Chairs should closely examine the committee’s expanded remit and assess whether committee members have the necessary expertise to oversee the integration of workforce strategies with the business.

1. Ask critical questions about the new topics. Some key questions to be asked include: Do we receive regular reports from the CHRO about the company’s talent strategies? Do the workforce metrics provided help us understand the return on investment in workforce resources?
   
   
2. Review the company’s current workforce statistics in preparation for the SEC’s pending HCM disclosure. Has the committee considered what portion of work is done by contingent or part-time workers and the potential impact on workforce engagement, productivity and labor costs?
   
   
3. Identify directors whose background is best suited to partner with the CHRO to elevate workforce strategies at the board level.

• Shareholder expectations. 65% of the shareholder proposals submitted last year at S&P 1500 companies related to ESG topics. DEI, collective bargaining and employee safety typically have greater investor support. Committees should be equipped to discuss workforce-related concerns even if the company has not typically received these types of proposals.