What Can I Do?

Coaching Remuneration Committee Chairs and HR Directors to Maximise Remuneration Committee Effectiveness

The Remuneration Committee Chair’s job is frequently challenging. Not only is pay a technical, complex area, but there are many interested parties, whose objectives and interests often differ. These include shareholders, the Chief Executive, the HR Director, the Company Secretary, the Chair of the Committee, the other members of the Committee, the Company Chair, the media, the advisors and employees. Handled badly, the Committee can become dysfunctional. Reputations can also be damaged. The Committee’s advisor also has a key role and needs to be managed to serve the Committee most effectively.

Some of the comments made to me over the years include:

‘The CEO really dislikes me. I feel uncomfortable on the board. What shall I do?’

‘I feel alone. The Committee wants to take a racier approach but it’s my head on the block’

‘My advisers are too cautious’

‘The Committee is being dominated by one person who is knowledgable in this area. I don’t feel I am having much influence’

‘The CEO doesn’t really understand that investors think he will be paid too much. He thinks I am misreading the situation. What shall I do?’

​

‘I think the HR Director is telling the CEO all about our private discussions. What shall I do?’

The Group Human Resources Director also has challenges navigating between acting in the overall interests of the Company, maintaining a close relationship with the Remuneration Committee Chair and the Committee’s advisers and properly rewarding management including their boss. Not an easy task.

Examples of the comments made to me include:

​

‘The CEO is giving me a really hard time because he hates the proposals sent to the Committee’

‘I feel caught between the CEO and the Remuneration Committee Chair’

‘Should the Company get its own advisers separately from the Committee?’

‘The Committee Chair has much more experience of remuneration than I do and is always criticising my work. I am finding this very stressful’

‘We are racking up huge advisers’ fees and I am worried this will reflect badly on me. How do I manage them better?’

Drawing on my experience of advising over 100 FTSE companies I have put together a programme to help Remuneration Committee Chairs and Group Human Resource Directors deal with these challenges, particularly those new to the role. While my consultancy experience means that I understand the issues around executive remuneration policy, my role is not to act as a remuneration consultant. That will be done by someone else.

While each programme will be tailored to meet the needs of the client, the programme is likely to have some initial sessions which will help to equip you for the challenges of the role and maximise your effectiveness. Further sessions, which will focus on specific live issues, can then be scheduled at times of your choosing over the following year.

While this is not an exhaustive list, the programme is likely to cover many of the following:

• The Remuneration Committee’s place within the wider system

• The roles, interests and requirements of the various actors and how they interact

• Optimising key relationships, particularly the most critical ones and identifying any potential or actual conflicts

• The history of the Committee and its members

• Making the Committee as effective as possible, including its procedures, membership, roles and skills, the conduct and chairing of its meetings and planning the annual remuneration cycle

• The challenges facing the Committee Chair, including strengths and areas for development

• Strategies for managing conflicts

• Communicating with investors

• Getting the best out of your advisers

• What I need to know and how to learn it