A Guide to Designing a Compensation Philosophy
Creating a Compensation Philosophy can be done fairly easily by incorporating a few key topics, which are common in compensation philosophies:
- Pay for Performance at the Organization & Individual level
- Recruit & retain world-class talent
- Minimize unnecessary risk-taking
- Align compensation programs with the creation of shareholder value
When developing your own, the philosophy should not be simply cut and pasted. The philosophy should reflect your own Organization’s culture, values, and goals. In addition to the four key components listed above, Companies may include another language around points that are important to them. For example, Boeing also includes language around safety, and Citi includes language around ethical integrity in their Compensation philosophies.
In the examples, that follow, you’ll be able to browse a variety of compensation philosophies, all unique to the company and designed to reflect their business – some verbose, and some succinct.
Unless otherwise noted, each compensation philosophy is sourced from the Organization’s 2022 Schedule14A statement, otherwise known as the Proxy Statement.
Amazon’s Compensation Philosophy
In his very first letter to shareholders in 1997, Jeff Bezos highlighted our belief that a fundamental measure of our success is the shareholder value we create over the long term. In that letter, he identified our compensation program as one of our fundamental management approaches that, because of our emphasis on the long term, enables us to make decisions and weigh tradeoffs differently than other companies. To support these goals, we prioritize stock-based compensation that vests over many years and encourages motivated, customer-centric employees to think and act like owners, because they are owners. We believe this focus on the long term has produced strong results for our shareholders over the past 25 years.
As with everything we do at Amazon, we have over the years reviewed and re-evaluated our executive compensation program, taking into account views of our shareholders, including evaluating arrangements like annual bonuses and one-, two-, or three-year performance-vesting equity awards. Having considered other approaches, we remain committed to the structure of our executive compensation, emphasizing periodic grants of time-vested restricted stock units vesting over the long term, for three key reasons:
- It focuses on the true long-term success of our business, not on isolated one-, two-, or three-year goals that encompass only a limited and selective portion of our objectives and that can reward executives with above-target payouts even when the stock price remains flat or declines;
- It perfectly aligns our executives’ compensation with the returns we deliver to shareholders; and
- It works, having allowed us to:
- attract and retain incredibly talented people who have guided our business through countless challenges;
- develop our business in ways that we could not have conceived a few years earlier, including initiatives that later became AWS, Kindle, Alexa, and our robust third-party seller business;
- make long-term commitments to sustainability and other environmental, social, and human capital initiatives and goals; and
- deliver strong long-term returns to our shareholders.
We recognize that our executive compensation program differs from the approach used by many companies, but we have carefully considered those alternatives and, based on how we run our business and what we have achieved, we see far more risks than potential benefits from changing an approach that has been so successful for our shareholders over the past 25 years, simply to fit into a mold followed by other companies.
Source: Amazon’s Compensation Philosophy: Page 68
Boeing’s Compensation Philosophy
Our executive compensation and benefit programs are designed to attract, incentivize and retain highly talented individuals with diverse backgrounds and experience who are committed to our core values of safety, quality, integrity and sustainability. We do this by focusing on the following objectives:
Pay for Performance
- Each element of our executives’ compensation is designed to align with our long-term business strategy and drive sustainable operational excellence and strong financial results.
- Annual and long-term incentive compensation are linked to individual and Company performance, ensuring that our leaders are rewarded for creating shareholder value, living our values and successfully implementing our business strategy.
Attract and Retain World Class Talent
- In an increasingly competitive market, our compensation structure positions us to compete effectively for the best executive talent.
- High-performing executives may earn above-target pay when individual and Company performance goals are exceeded.
Support our Commitment to Safety
- Our robust clawback policy permits the recoupment of past incentive pay in the event of instances of misconduct that compromise the safety of our products and services, even absent a restatement of financial results.
- The Compensation Committee assesses executive performance with respect to safety and our other core values, including through formal consultation with the Aerospace Safety Committee on individual performance reviews for executive officers.
- Our annual incentive plan incorporates operational performance goals designed to drive continuous improvement in product safety, employee safety and quality.
Align with Shareholder Interests
- Our executive compensation packages are weighted heavily towards variable equity and incentive awards.
- Executive officers must own significant amounts of Boeing stock.
- Our CEO’s annual stock option awards prohibit him from selling or transferring acquired shares until separation, and his annual restricted stock unit awards will not be distributed to him until after he leaves the Company.
- We do not accelerate vesting of equity awards solely in connection with a change in control.
Reduce Risk
- Our annual incentive awards, performance awards and PBRSUs are subject to payout caps.
- All incentive compensation is subject to a rigorous clawback policy for misconduct or fraud.
- Executive officers may not engage in pledging, hedging or other speculative trading activity.
- The Compensation Committee and its independent compensation consultant review our executive compensation plans and programs for inappropriate risk on an ongoing basis
- The Compensation Committee’s independent compensation consultant conducts its own independent risk assessment of the Company’s annual and long-term incentive design.
Citi’s Compensation Philosophy
Our Compensation Philosophy is designed to encourage prudent risk-taking and management of controls while attracting the world-class talent necessary to our success. Our Compensation Philosophy is summarized by the following five objectives:
- Reinforce a business culture based on the highest ethical standards
- Manage our risks by encouraging prudent decision-making
- Reflect regulatory guidance in compensation programs
- Attract and retain the best talent to lead us to success
- Align compensation programs, structures, and decisions with stockholder and other stakeholder interests
- The full statement of our Compensation Philosophy is available on our public website.
Consistent with our Compensation Philosophy, we design our executive pay program to motivate balanced behaviors. The compensation of our executive officers is determined based on a disciplined policy of goal setting and measurement and assessment of performance against pre-established goals. Transparency, discipline and performance feedback are key factors in our approach to executive officer compensation. Implementation of the process spans the full year.
Source: https://www.sec.gov/Archives/edgar/data/831001/000120677422000697/citi3969751-def14a.htm
Dana Incorporated’s Compensation Philosophy
The objective of our executive compensation program is to retain, attract, motivate and reward our senior leaders in the successful execution of our strategy. Our long-range enterprise strategy builds on our strong foundation of innovation and technology and leverages our operating model, driving cross-functional resource sharing while maintaining a customer-centric focus. Our strategy furthers the expansion of our global markets and accelerates the commercialization of new technology, enabling us to sustain our profitable growth trajectory while capitalizing on our position as a leader in electrified mobility. The program is designed to balance short-term performance with long-term growth, offering compensation and benefits that are competitive with executive compensation arrangements provided to executive officers at similar levels at comparably sized companies with whom we compete for talent.
Source: https://www.sec.gov/Archives/edgar/data/26780/000114036122008758/ny20001595x1_def14a.htm
Eastman Kodak’s Compensation Philosophy (2018)
Our compensation philosophy is to provide a compensation and reward program that:
- Attracts, retains and motivates outstanding talent required to achieve our business objectives;
- Drives profitable growth and increases shareholder value;
- Incentivizes and rewards success in a diverse set of businesses;
- Rewards company, division and individual performance; and
- Provides an external market-based competitive compensation structure (base salary, variable pay and long-term incentives).
The guiding principles for our compensation philosophy are:
- Market competitiveness: aggregate total direct compensation (base salary, variable pay and long-term incentive) should be near the market median (if affordable), with flexibility to pay above the median where necessary to attract and retain specific talent.
- Reinforce a performance-based culture: create greater line-of-sight and reward for divisional performance, with significant performance-based differentiation.
Source: https://www.sec.gov/Archives/edgar/data/31235/000120677418001133/kodak3353631-def14a.htm
Ford’s Compensation Philosophy
Ford Motor Company is committed to helping build a better world, where every person is free to move and pursue their dreams. The Company’s Ford+ plan for growth and value creation combines existing strengths, new capabilities, and always-on relationships with customers to enrich experiences for and deepen the loyalty of those customers.
Attracting, retaining, and developing great talent is fundamental to achieving our Ford+ plan. A core principle of our talent management strategy is a longstanding commitment to equal opportunity in all aspects of employment, including the way Ford compensates its employees. This principle also helps provide a foundation for how we care for each other and create a culture of belonging at Ford.
Source: https://www.sec.gov/Archives/edgar/data/37996/000110465922041499/tm2130881-4_def14a.htm
General Electric’s Compensation Philosophy
Drive Accountability and Performance
- Our incentive programs are designed to drive accountability for executing our strategy.
- Annual bonuses are tied to business unit results for business unit executives or to total company performance for corporate executives; annual equity awards for all executives are based on overall company performance.
- We set target performance levels that are challenging and aligned to the goals we communicate to investors.
- We set commensurately more challenging goals in association with above-target payout levels.
Incentivize Short- and Long-Term Performance
- Our program provides an appropriate mix of compensation elements.
- Cash payments reward achievement of short-term goals while equity awards encourage our named executives to deliver sustained strong results over multi-year performance periods.
- The committee continues to increase the portion of our executive compensation delivered in the form of long-term equity incentive compensation, rather than cash, to further align our executives with investors’ interests.
Attract and Retain Top Talent
- Provide competitive compensation programs that attract and retain talented executives with a strong track record of success, assuring a high performing and stable leadership team to lead our businesses.
- Continue to monitor market trends and align compensation programs with market where relevant.
No Excessive Risk Taking
- Our equity awards have specific holding and retention requirements for senior executives, which discourage excessive risk-taking by keeping long-term compensation aligned with our share price performance even after it is earned.
- The committee retains discretion to adjust compensation for quality of performance and lack of adherence to company values, and in cases of detrimental misconduct pursuant to our clawback policy
Source: https://www.sec.gov/Archives/edgar/data/40545/000120677422000763/ge_courtesy-pdf.pdf
Home Depot’s Compensation Philosophy
Pay for Performance: We designed our compensation program for associates at all levels with the intent to align pay with performance. By doing so, we seek to motivate associate performance and enhance morale, which drives a superior customer experience. We believe this alignment encourages achievement of our strategic goals and creation of long-term shareholder value.
The principal elements of our compensation program for executive officers are base salary, annual cash incentives and long-term equity incentives. We use a number of the financial metrics highlighted above, which drive shareholder value, as the key performance metrics in our compensation programs. This congruency aligns both pay with performance and executive interests with shareholder interests.
Source: https://www.sec.gov/Archives/edgar/data/0000354950/000035495022000116/hd2022proxystatement.pdf
Intel’s Compensation Philosophy (2021)
The principal elements of our pay-for-performance philosophy include a competitive pay positioning strategy, a heavy emphasis on incentive-driven pay, and goals that are appropriately aligned with our business strategy (in terms of both selection and attainability), as evidenced by the following program components.
- The competition for executive talent in the technology sector continues to intensify. In addition to continuing to compete for talent against other successful, established technology companies, we increasingly face an even more competitive landscape as some of our largest customers have begun using their own silicon designs and as a wide range of smaller, high-growth companies focused on emerging technologies continue to develop. The Compensation Committee believes that a competitive, target total direct compensation opportunity is critical to attract, retain, and reward the executive talent crucial to driving value for our stockholders. To that end, total compensation is designed to be competitive with a peer group of companies all vying for the top technical talent in the world. Adjustments to each individual’s pay position take into account our desire to compensate our executive officers based upon performance, criticality of role, and experience, while fairly balancing internal and external pay equity considerations among executive roles.
- Total direct compensation opportunities are designed so that a substantial portion of executive pay is variable or “at risk,” based primarily on specific financial metrics or stock price performance over the long term.
- To further align our executive officers’ interests with those of our stockholders, the Compensation Committee has structured compensation so that the proportion of variable cash and equity-based pay increases with higher levels of responsibility.
- By using financial, operational, and stock price measures such as net income growth, cumulative EPS growth, One Intel goals, and TSR, our incentive plans provide a clear and quantifiable link to operational performance with the goal of creating long-term stockholder value.
Our executive compensation pay elements include base salary, an annual cash bonus, a quarterly cash bonus, and equity awards consisting of RSUs and PSUs. We also provide a competitive benefits package that includes health care, retirement benefits, financial planning, life insurance, and other programs that are designed to allow our executive officers to maximize time and attention on activities designed to increase stockholder value. We believe that the sum of these components provides highly motivational incentives that link the pay of our executive officers to the performance of our company and enables Intel to attract and retain the very best talent in a highly competitive market.
Source: https://www.sec.gov/Archives/edgar/data/50863/000005086322000011/proxy2022.htm
John Deere’s Compensation Philosophy
Deere’s compensation philosophy is to pay for performance, support Deere’s business strategies, and offer competitive compensation. Our compensation programs consist of complementary elements that reward achievement of both short-term and long-term objectives. The metrics used for our incentive programs are either associated with operating performance or are based on a function of Deere’s stock price with linkage to revenue growth and Total Shareholder Return (TSR). See “Review of Pay for Performance Relative to Compensation Peer Group” in the CD&A, which highlights our success in connecting executive compensation with Deere’s financial performance.
Our compensation approach is supported by the following principles, among others, as fully described in the CD&A:
- We strive to attract, retain, and motivate high-caliber executives
- As executives assume more responsibility, we increase the portion of their total compensation that is at-risk and that is tied to long-term incentives
- We structure our compensation program to be regarded positively by our shareholders and employees
- We recognize the need to manage value throughout the business cycle
Source: Page 33
Kroger’s Compensation Philosophy
As one of the largest retailers in the world, our executive compensation philosophy is to attract and retain the best management talent as well as motivate these associates to achieve our business and financial goals. Kroger’s incentive plans are designed to reward the actions that lead to long-term value creation. We believe our strategy creates value for shareholders in a manner consistent with Kroger’s purpose: To Feed the Human Spirit. The Compensation Committee believes that there is a strong link between our business strategy, the performance metrics in our short-term and long-term incentive programs, and the business results that drive shareholder value.
To achieve our objectives, the Compensation Committee seeks to ensure that compensation is competitive and that there is a direct link between pay and performance.
To do so, it is guided by the following principles:
- A significant portion of pay should be performance-based, with the percentage of total pay tied to performance increasing proportionally with an NEO’s level of responsibility.
- Compensation should include incentive-based pay to drive performance, providing superior pay for superior performance, including both a short- and long-term focus.
Compensation policies should include an opportunity for, and a requirement of, significant equity ownership to align the interests of NEOs and shareholders. - Components of compensation should be tied to an evaluation of business and individual performance measured against metrics that directly drive our business strategy and progress toward our corporate ESG priorities.
- Compensation plans should provide a direct line of sight to company performance.
- Compensation programs should be aligned with market practices.
- Compensation programs should serve to both motivate and retain talent.
Source: https://www.sec.gov/Archives/edgar/data/0000056873/000110465922054782/tm2212949-2_defc14a.htm
Loews’ Compensation Philosophy
We have maintained a consistent compensation philosophy for many years, which takes into account that the quality of our leadership has a direct impact on our performance. Our compensation philosophy is based on the following objectives:
- Motivating superior long-term financial performance and the creation of shareholder value over the long term;
- Discouraging unreasonable risk-taking;
- Aligning compensation with our long-term strategy and focus and the interests of our shareholders;
- Providing market-competitive compensation;
- Avoiding excessive compensation; and
- Attracting and retaining high-caliber executive talent.
We believe in recognizing the performance of our executive officers primarily through a combination of cash compensation, made up of a fixed base salary and incentive compensation, and stock-based compensation, which, in 2021, consisted of performance-based restricted stock units. Because cash incentive compensation and our restricted stock unit awards are tied to performance, a large majority of the compensation paid to our executive officers is performance-based and, other than their fixed base salaries, no compensation is guaranteed.
Source: https://www.sec.gov/Archives/edgar/data/0000060086/000114036122011743/edge20001697x1_proxy.htm
MetLife’s Compensation Philosophy
MetLife’s competitive compensation philosophy is generally to provide Total Compensation around the size-adjusted median for like positions at Comparator Group companies, taking into account MetLife’s assets, revenue, and market capitalization relative to other companies in the Comparator Group.
Objectives
- Provide competitive Total Compensation opportunities to attract, retain, engage, and motivate high-performing executives
- Align compensation plans with short- and long-term business strategies
- Align the financial interests of executives with shareholders’ through LTI and Share ownership requirements
- Make a vast majority of Total Compensation variable and subject to Company and individual performance.
Source: https://www.sec.gov/Archives/edgar/data/0001099219/000114036122016708/ny20001550x1_def14a.htm
News Corp’s Compensation Philosophy
The Compensation Committee has established an executive compensation program that seeks to support the creation of long-term growth and value for our stockholders through three key objectives:
Drive Company Performance
- Emphasizes variable, performance-based compensation
- Includes balance of short- and long-term compensation elements to motivate and reward superior performance without encouraging unnecessary and excessive risk-taking
Align Pay with Performance
- Based on a mix of performance metrics to hold executives accountable for Company and individual performance
- Does not guarantee incentive compensation (bonuses or equity awards); payouts are determined based on achievement of rigorous performance targets
Attract, Retain and Motivate Leadership Talent
- Designed to be competitive to attract and retain the highest quality talent
- Considers compensation practices and trends in relevant industries
Source: https://www.sec.gov/Archives/edgar/data/0001564708/000114036122036282/ny20004626x1_def14a.pdf
Owen’s Corning’s Executive Compensation Philosophy
Executive compensation opportunities should align with and enhance long-term shareholder value. This core philosophy is embedded in all aspects of our executive compensation program and is reflected in our guiding principles. We believe that the application of these principles enables us to create a meaningful link between compensation outcomes and long-term, sustainable value for our shareholders.
Source: https://www.sec.gov/Archives/edgar/data/0001370946/000119312522072007/d241910ddef14a.htm
Proctor and Gamble’s Compensation Philosophy
Our fundamental and overriding objective is to create value for our shareholders at leadership levels on a consistent long-term basis. The C&LD Committee approaches CEO and overall executive compensation with the same pay principles used to set compensation at all levels of the Company.
- Emphasize Pay for Performance by aligning incentives with business strategies to reward executives who achieve or exceed Company, business unit, and individual goals, while removing any incentive to focus on a single goal to the detriment of others.
- Pay Competitively by setting target compensation opportunities to be competitive with a Peer Group of other global corporations of similar size, value, and complexity.
- Focus on Long-Term Success by including equity as a cornerstone of our executive pay programs and by using a combination of short-term and long-term incentives to ensure a strong connection between Company performance and actual compensation realized.
Quantum’s Executive Compensation Philosophy
Our compensation philosophy is founded on four guiding principles designed to:
- Attract and Retain: We strive to offer a total compensation program that attracts and retains top talent and is competitive against our peer companies.
- Motivate: We use an appropriate mix of fixed and variable compensation to motivate desired behaviors that allow our team to drive the Company’s success.
- Reward: We structure our cash and equity incentives to generously reward achieving the Company’s short- and long-term objectives
- Drive Long-Term Value: Actual compensation depends on achieving Company objectives, aligning executive and shareholder interests to drive long-term value
Our compensation philosophy also:
- Promotes achievement of Quantum’s short- and long-term strategic objectives established by the Board and the Company’s senior management team.
- Provides a strong link between pay and performance, while motivating and rewarding employees for significant contributions to Quantum’s success.
- Aligns the interests of Quantum’s employees with our shareholders and the Company’s success.
- Considers relevant economic and market factors.
- Maintains equitable and defensible compensation programs that incorporate best-practice internal and external controls
Source: https://www.sec.gov/Archives/edgar/data/0000709283/000070928322000022/a2022definitiveproxy.htm
Rite Aid Corporation’s Executive Compensation Philosophy
We believe strongly that pay should align with performance, and this focus is reflected in our executive compensation program. We seek to provide our NEOs with opportunities to earn total direct compensation (base salary, annual incentives, and long-term incentives) that is generally comparable to compensation levels provided to peer company executives and executives within other similarly-sized retailers and health services companies more broadly. Because of our desire to reinforce a performance-based culture, the Company emphasizes a compensation mix that is comprised primarily of variable pay. As a result, base salary makes up the smallest portion of total direct compensation for the NEOs, with variable pay in the form of annual and long-term incentives comprising the largest portion. The compensation mix varies by position, taking into account each position’s ability to influence Company results, as well as competitive practice.
Source: https://www.sec.gov/Archives/edgar/data/0000084129/000110465922070078/tm228886-2_defc14a.htm
Starbucks’ Compensation Philosophy
Our Total Rewards philosophy is designed to recognize and reward the contributions of all partners, including executives. We offer a comprehensive benefits package to all eligible full- and part-time partners in the U.S. and locally competitive benefits packages in other countries. In addition to our equity incentive plans discussed above, we offer an employee stock purchase plan to partners in the U.S. and Canada that allows participants to purchase Starbucks stock at a 5% discount to the fair market value at the end of each offering period under the plan. We believe our Total Rewards practices motivate our executives to build long-term shareholder value and reward the partners who take care of our customers.
- Broad-Based “Bean Stock” Program: A long-term incentive grant of time-based RSUs was made in November 2019 to approximately 211,000 eligible non-executive partners in 17 markets around the world, including qualified part-time partners. We refer to this broad-based equity program as our “Bean Stock” program. Bean Stock participants include those partners who work in our stores and serve our customers directly. In fiscal 2020, Bean Stock participants realized approximately $148 million in pre-tax gains from previously granted Bean Stock awards.
- Future Roast 401(k) Savings Plan: Available to all U.S. partners who are at least age 18 with 90 days of service. The Starbucks Match within the 401(k) is 100% of the first 5% of eligible compensation contributed each pay period. The match is immediately fully vested and is contributed to each participant’s 401(k) account each pay period along with the participant’s contributions. In fiscal 2020, Starbucks contributed more than $123 million in matching contributions.
- Insurance Coverage for Partners: For more than 20 years, Starbucks has provided health insurance coverage for partners working 20 hours or more a week. Starbucks also provides life and disability insurance to our partners.
- College Achievement Plan: The Starbucks College Achievement Plan was launched in fiscal 2014. It provides eligible partners in the U.S. with the opportunity to earn a bachelor’s degree online from Arizona State University with 100% tuition coverage. Additionally, our military service member and veteran partners can extend an additional Starbucks College Achievement Plan benefit to their spouse, domestic partner or child. As of the end of fiscal 2020, more than 17,000 partners were participating in Starbucks College Achievement Plan, with more than 4,800 graduates.
- Paid Sick Time, Vacation, Holiday and Parental Leave: Starbucks is an industry leader in paid sick time and parental leave and has competitive policies for vacation and holiday pay.
The above benefits specifically apply in the U.S., but we generally strive to provide similar benefits in all countries while considering the social coverage programs available in each country.
Executives are eligible to participate in all benefit plans we offer to partners generally. This helps us attract and retain top executive talent.
Source: Starbucks Compensation Philosophy (Page 51)
Tesla’s Compensation Philosophy
As the world’s first vertically integrated sustainable energy company, our mission is to accelerate the world’s transition to sustainable energy. We design, develop, manufacture and sell high-performance, fully electric vehicles and energy generation and storage systems, and also install and maintain such energy systems and sell solar electricity. To achieve our goals, we have designed, and intend to modify as necessary, our compensation and benefits program and philosophy, to attract, retain and incentivize talented, deeply qualified and committed executive officers who share our philosophy and desire to work toward these goals. We believe compensation incentives for executive officers should promote the success of our company and motivate them to pursue corporate objectives. We have put an emphasis on structuring compensation incentives so as to reward clear, easily measured performance goals that closely align their incentives with the long-term interests of our stockholders. Further, we have sought to harmonize the compensation structures of our other employees to conform to our overall compensation philosophy.
Our current compensation programs reflect our startup origins in that they consist primarily of salary and equity awards. Consistent with our historical compensation philosophy, we do not currently provide an annual cash bonus program or any severance provisions for continued cash payments or other benefits upon termination of employment with us.
As our needs evolve, we intend to continue to evaluate our philosophy and compensation programs as circumstances require, and, at a minimum, the Compensation Committee will review executive compensation annually. We may from time to time make new equity awards and adjustments to the components of our executive compensation program in connection with our periodic compensation review.
Source: Tesa’s Compensation Philosophy, Page 6
Uber’s Compensation Philosophy
We operate in rapidly evolving and highly competitive markets worldwide. To succeed in these environments and execute our long-term strategic goals of building our platform and increasing profitability, we believe we must increase the scale of our global network, continue to develop and update our technology, use our product expertise and operational excellence, partner with our employees, platform users, and the cities and communities we serve, and encourage our executives to model and reinforce our mission and values. In order to promote long-term stockholder value creation and link the compensation of our executive officers to these long-term strategic goals and key drivers of our business, the primary focus of our compensation philosophy and program is on the long-term elements of target total compensation.
Source: Uber’s Compensation Philosophy (Page 54)
Valvoline’s Compensation Philosophy
The Compensation Committee has adopted a Compensation Philosophy, which it reviews annually, that is intended to align our compensation program with the interests of our shareholders. This philosophy supports our business strategy and financial and talent management objectives to deliver long-term profitable growth
Objectives
- Attract, retain and motivate a high-performing and increasingly diverse employee population.
- Link a meaningful portion of compensation to sustained long-term performance that will create shareholder value.
- Provide transparency to key stakeholders.
- Mitigate risk through sound plan design and decision-making.
Supports Profitable Growth and Talent Management
- Balance short-term financial goals with long-term shareholder value creation.
- Regularly evaluate compensation program effectiveness.
- Ensure participants are not motivated to take excessive risk.
- Recognize individual and team contributions and potential through pay decisions.
Use of Multiple Levers to Deliver Total Compensation
- Base salary attracts and retains executives by providing a market-competitive fixed income.
- Annual incentive programs focus executives on short-term financial performance.
- Long-term incentive awards align executives with shareholder interests, link compensation with key business objectives (earnings per share and total shareholder return), retain executives, and build meaningful executive ownership in the Company.
Pay Positioning
- Benchmark pay levels and practices against the peer group (defined below) and the competitive market.
- Targets the 50th percentile of the competitive range for target total direct compensation and allows company and/or individual performance to drive actual compensation up or down. Actual total direct compensation may range between the 25th and 75th percentile based on an executive’s role, responsibilities, and experience.
Source: https://www.sec.gov/Archives/edgar/data/0001674910/000119312522306590/d393811ddef14a.htm
Walgreens Boot’s Compensation Philosophy
- Inspire leaders to champion the Company’s strategy, culture and values to drive results and ensure a diverse, inclusive and ethical workplace
- Align the interests of our senior executives with those of our stockholders, and reward for the creation of long-term value
- Drive and reward individual accountability through both financial and non-financial, including environmental and social, goals
- Create a strong linkage between pay and performance through the use of performance-based incentive awards
- Provide market competitive reward opportunities designed to attract and retain top talent
Xerox’s Executive Compensation Program
As described in detail in the Compensation Discussion and Analysis of this Proxy Statement, the Compensation Committee seeks to closely align the compensation of our NEOs with the interests of the Company’s shareholders.
- The Company’s executive compensation program is designed to attract, retain, and motivate top executive talent, drive performance without encouraging unnecessary or excessive risk-taking and support both short-term and long-term growth for shareholders.
- The compensation framework emphasizes a pay-for-performance model, a focus on long-term growth and diversified performance metrics. The Compensation Committee believes that our compensation framework effectively aligns pay with individual and Company performance as described in detail on page 40 in the Linking Pay to Performance section.
- Ninety-one percent (91%) of our Chief Executive Officer and eighty-three percent (83%) of our other named executive officers’ total target compensation is “at-risk” and dependent upon performance of short-term and long-term financial and business objectives and share appreciation, as described on page 55 in the Target Pay Mix section.
- The Company has developed and implemented practices, as detailed in the Best Practices section on page 38, which the Compensation Committee, in consultation with its independent consultant, believes to be effective in both driving performance and supporting long-term growth for our shareholders.
- The Board and leadership team maintain a robust continuous shareholder engagement program, which helps inform the Compensation Committee’s executive compensation deliberations and decisions, as detailed beginning on page 40 in the Say on Pay Votes and Shareholder Engagement section. In particular, the Committee has summarized actions taken in direct response to shareholder feedback, including the elimination of overlapping metrics between the Company’s annual and long-term incentive programs for 2022, and the addition of an ESG component to the annual incentive design — as a modifier for 2021 and as a true weighted metric for 2022.
YUM Brands Executive Compensation Philosophy
The business performance of the Company is of the utmost importance in how our executives are compensated. Our compensation program is designed to both support our long-term growth model and hold our executives accountable to achieve key annual results year after year. YUM’s compensation philosophy for the NEOs is reviewed annually by the Committee and has the following objectives:
- Attract and retain the best talent to achieve superior shareholder results—To be consistently better than our competitors, we need to recruit and retain superior talent who are able to drive superior results. We have structured our compensation programs to be competitive and to motivate and reward high performers.
- Reward performance—The majority of NEO pay is performance-based and therefore at risk. We design pay programs that incorporate team and individual performance goals that lead to shareholder return.
- Emphasize long-term value creation—Our belief is simple: if we create value for shareholders, then we share a portion of that value with those responsible for the results.
- Drive ownership mentality—We require executives to invest in the Company’s success by owning a substantial amount of Company stock.
Source: https://www.sec.gov/Archives/edgar/data/0001041061/000119312522100360/d158301ddef14a.htm
Zillow’s Compensation Philosophy and Objectives
We believe our success largely depends on our ability to attract, retain and motivate talented employees to operate our Company in a dynamic and changing market. We compete with many other companies to attract and retain a skilled executive management team.
To meet this challenge, the objectives of our compensation program are to:
- attract qualified and experienced executive officers who will enable us to achieve our business objectives;
- retain and motivate our executive officers to achieve superior performance;
- reward performance; and
- align the interests of our executive officers with those of our shareholders by motivating our executive officers to increase shareholder value.
Source: https://www.sec.gov/Archives/edgar/data/0001617640/000161764022000050/a2022proxystatement.htm
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