Companies interested in comparing best practices for board and committee charters and calendars should peruse Sidley Austin’s detailed sample calendar.
Why it matters. As board directors focus on broader strategic priorities, it is crucial that appropriate time is spent covering essential governance topics required by U.S. listing exchanges, Sarbanes-Oxley and SEC regulations. The Sidley paper details actions for each required committee and provides sample timing based on a typical calendar-year fiscal year.
- Full boards typically meet 6 times per year for regular meetings (January, February, May, July, September and November).
- Compensation committees follow suit with at least 4 annual meetings (though this number is rising) while the Audit Committee normally has 5 and the Nominating and Governance Committee has 3.
- Sidley offers a sample calendar that could be used as a checklist for the Committee with suggested sequencing of agenda items for the full board as well as the three committees.
- The calendar should be adapted to each company’s situation and reflect all procedural requirements contained in the charter and company bylaws.
Common Schedules for Compensation Committees
January: Proxy Preparation
- Review draft of the CD&A and related proxy disclosures including pay-versus-performance and pay ratio. Examine reports on compensation risk assessment and scope of compensation advisor services.
- Ensure executive and director equity holdings comply with stock ownership policies.
February: Executive Compensation Approval
- Evaluate and approve the performance and compensation for the CEO and executive officers.
- Review and approve the final CD&A and proxy disclosure under the committee’s purview.
July: Policy Review & Succession Planning
- Take a fresh look at policies and practices as well as the charter to recommend proposed changes. This may include shareholder engagement practices, clawbacks, hedging of company stock, and share ownership guidelines.
- Review executive succession plans in anticipation of reporting to the full board.
November: Next Year’s Planning
- Approve corporate goals related to executive compensation plan payments.
- Review incentive-based programs and targets for recommendation to the full board.
- Complete conflict of interest and independence analysis for committee advisors and legal counsel.
Additional Resources. Check out the Center’s Guide to the Expanded Compensation Committee offering sample calendars and a wealth of insights for managing the charter, calendar and agenda. Pearl Meyers’ Compensation Committee Blueprint also offers helpful advice for modifying the charter.