On the 2022 compensation committee agenda

The events of the last two years have solidified stakeholder expectations regarding the board’s responsibility to oversee issues related to the company’s workforce in addition to the more traditional topics of executive compensation and CEO succession planning. While this expansion has been called for by some stakeholders—including labor leaders and certain institutional investors—for many years, expectations for this level of oversight have continued to mount. Boards are taking a holistic approach to oversight of issues related to the executive suite and entire workforce, including part-time, gig workers, etc.

Accordingly, many companies have added oversight of human resources/human capital topics to the compensation committee’s agenda, charter, and title (e.g., human resources committee, compensation and human capital committee). Throughout this article, we use the title "compensation committee" as an all-encompassing category of committees focused on compensation and broader human capital matters.

Drawing on our research, insights and conversations with directors and business leaders we have highlighted six issues to keep in mind as compensation committees consider and carry out their 2022 agendas:

• Ensure that compensation plans are aligned with strategy and focused on key drivers of firm performance.
• Balance all components of total rewards, including benefits.
• Recognize the role of the compensation committee in the board’s oversight of ESG.
• Understand investors’ and other stakeholders’ expectations for compensation and HCM.
• Reconsider compensation committee composition, charter, and operations.
• Revisit director and executive compensation for legal and regulatory soundness.