That’s the main conclusion of new research by Pearl Meyer & Partners into the approaches that companies and boards are using to develop the increasingly important Compensation Discussion & Analysis (CD&A) section of their annual proxy statements.
“The CD&A has grown from a required chapter in a legal document to a critical communication tool that outlines a company’s executive compensation philosophy and program design and explains how it supports the corporate business strategy,” the firm said.
As investor activism and federal requirements under the Dodd-Frank Act push executive-compensation practices into higher status, the New York-based board-advisory firm surveyed representatives of 93 publicly held companies and came up with 3 key conclusions about effective CD&A practices.
Following these guidelines, boards are less likely to have any surprises come their way with regard to executive pay, and will be more likely to achieve their desired outcomes from all constituents.
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