Welcome to CORPGRO

Welcome to CORPGRO Newspad. We aim to give you comments and views on a range of executive compensation, incentive, reward and ESG topics. For example:

What's the Story?

The FT reported this week a post COVID bonus bounce for FTSE 100 CEOs, taking total pay up 23% for 2021/22. The average bonus outcome was 86% of maximum, much above the long-term average of 70-75%.

Why Does it Matter?

Many employees and customers are struggling with UK inflation above 10%, much increased mortgage outflows and worries about food and energy costs in particular. Many 2022 pay settlements are below inflation. On top of all this, the now predicted UK recession is bad news for both house prices and job security. A spate of cost-of-living bonuses is a minor respite.

Remuneration outcomes for Directors should be sensitive to the wider scene**. The 2021/22 bonus outcomes pushed up CEO total pay to some £3.9 mill. The pay setting process, and judgements on outcomes, will be under shareholder and public scrutiny in 2023 AGMs.

Comment:

Just to Adjust? - AGM 2023

These 2021/22 bonuses have been paid, and voted upon at AGMs mainly pre-dating the depth of the cost-of-living crisis.

The 2023 AGMs might be stormy as 2022/23 bonus results come under laser examination.

Great bonus for excellent results is justifiable. But you must tell the story with strong, stark simplicity. If the bonus is skewed by a target setting error though, it may be just to adjust.

**Principle R. Section 5, The UK Corporate Governance Code 2018

CORPGRO helps companies grow strong sustainable value. We use our skills in executive compensation, incentives, reward and HR to deliver this purpose.

CORPGRO Helps Companies With:

Executive Compensation and Incentive Design 

Highly motivated top talent will deliver great business results.

Attracting top talent and rewarding delivery of the right results is vital for business success. And that needs attractive total quantum against a tight competitive market.

Executives must see the total package as fair; with relevant, attainable incentives and exciting upside for a well delivered out-performance result.

Compensation policies and incentive designs do not wear out; but they do become obsolete as business goals, competitive landscape and governance norms change constantly. Inertia risk is real.

CORPGRO is well versed in the practical and political aspects of designing and delivering great executive compensation positioning and sharp, effective incentives.

Remuneration Advisory and Support

Compensation results with "at a glance" approval from both Executives and Shareholders

Executive packages and incentives must align with strategy if management are to deliver the right results. Yet getting these important pay packages right can be hard.

Remuneration Committees must set the right mix: fixed versus variable pay, short-term versus long-term incentives, cash versus equity, and group versus individual reward.

Incentives must be shaped in the right direction, with effective weights and target ranges. Balancing profit delivery, future business development and ESG factors to support strong goodwill is vital.

The pay results overall must also be sensitive to the wider scene. Aligned with investor views obviously, but also the experience of others involved in value creation and set in a context of socially responsible outcomes.

CORPGRO has deep insight into the practical application of executive compensation set against the institutional investor corporate governance landscape. Comply or explain is real, but care is needed.

Reward and Share Plans 

Driving value creation through compensation spend

Compensation cost is a big ticket item for most companies. How that cost is deployed to create value is critically important.

The productivity impact of the talent base can be unleashed once talent potential, engagement and governance structures allow it to function fully. Management of talent by headcount or compensation cost only is sub-optimal at best.

Corporate purpose and culture have a real role. Fair rewards and relativities are important. So are gain share arrangements like equity plans to reward and promote value creation, and of course a strong DE&I profile.

The beyond cut comp-cost agenda for rewards will be a key differentiator for the successful companies of the future. The future of work is taking shape as 4IR (Fourth Industrial Revolution) unfolds.

CORPGRO understands the importance of these issues fully. Defining purpose, reward structures, fostering culture and engagement and sharing in success are all important.

ESG and Sustainability

Goodwill can make a world of difference

Environmental, Social, and Governance (ESG) is a hot topic, but much misunderstood. It links strongly to corporate goodwill; for listed companies the difference between share price and NAV per share.

This uncharted part of company value is big and for many has grown strongly in recent years. For some global titans, it forms the main part of market capitalisation in fact,

ESG in executive incentives is now commonplace. Soon too we shall see more, better and new ways to promote strong ESG in incentives. Indeed, many investors are calling for exactly this development.

The difference in ESG as a risk factor compared to a value creation driver will also become sharper.

Sustainability reports are now common, and must link strongly to the strategy and compensation reports. TCFD reporting is mandatory for many, some even provide a "Say on Climate" AGM vote. In the EU, sustainability reporting will be mandatory for c. 50,000 major companies from 1st January 2024.

Companies must judge their investment and rewards profile for the profit elements of the business against the non-profit results. This "Double Materiality" is the rounded delivery of full company results in the future.

This is not an investor or societal fad. Delivering on company purpose is not just a profit promise, profit delivered in the right way is important to sustainable success.

CORPGRO understands these deep trends, and their importance and implications for culture, rewards and executive compensation.

Thank you for your time. We would be delighted to discuss how we can help you and your business with any of these issues.

Please feel free to email or call:

Damian Carnell - [email protected] +44 (0) 7989 337118  

VA Bec Bostock - [email protected]

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