Director Essentials: Unionization on the Rise: What Boards Should Know

After a long decline, unions are back in the spotlight. This renewed interest can be credited to a surge in labor organizing at high-profile companies such as Amazon, Starbucks, and Apple—companies and industries where unions have had little success organizing in the past.

With a tight job market, a pro-union president, public support at an all-time high, and employees having the upper hand following a turbulent three years living through a pandemic, a resurgence of unions should not be a surprise. 

The focus on the board’s compensation committee has never been sharper. The components of compensation plans and the link between compensation and company performance are under intense scrutiny from shareholders, employees, policymakers, the media, and other stakeholders. The Report of the NACD Blue Ribbon Commission on the Compensation Committee revisits NACD’s 2003 Report of the NACD Blue Ribbon Commission on Executive Compensation to highlight the new environment in which compensation committees—and, more broadly, boards—are now operating. It recommends that the compensation committee and board work together to establish an executive compensation philosophy that supports the company in creating long-term, sustainable value.

The report includes ten specific recommendations for compensation committees to consider when evaluating their compensation philosophies. It also provides practical tools, such as sample compensation committee charters, a compensation committee assessment, and guidance on executive employment contracts.