Boardroom Tools

Four Operating Principles for Developing Resilient Executive Compensation Programs

By NACD Staff


Committees and Roles

In brief: Enterprise risk management can be incorporated into an executive-compensation program by an astute and forward-thinking committee. However, by its very definition, atypical risk cannot be foreseen. Boards who adopt an adaptive and flexible governance approach can consider the unknown and apply it to the very concrete reality of an executive-compensation plan. This tool outlines a set of operating principles based on plans, people, processes, and perspectives that can help compensation committees prepare to weather—and ideally capitalize on—the effects of a fast-changing business climate. Compensation committees can use it to benchmark their current practices and identify opportunities for improvement.

Most relevant audiences: board chairs, lead independent directors, CEOs, audit and risk committee members, chief risk officers, and heads of internal audit

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