On the 2023 compensation committee agenda

As boards adapt in response to the rapidly changing business and risk environment heading into 2023 driven by greater geopolitical instability, volatile markets, surging inflation, and the prospect of a global recession, compensation committees continue to expand their oversight. In addition to the traditional remit of compensation and succession planning for the CEO and C-suite, many committees have broader responsibility for oversight of talent strategy and human capital management (HCM) issues, including employee well-being and workplace culture. This shift signals the increasing importance of these issues to the board as stakeholders, particularly shareholders, maintain a sharp focus on compensation, talent, and retention risks and their link to corporate strategy and values amid a tight labor market and economic downturn.

Drawing on insights from our latest survey work and interactions with directors and business leaders, we highlight five issues to keep in mind as compensation committees consider and carry out their 2023 agendas:

• Ensure that compensation plans are properly aligned with the business strategy and focused on key drivers of performance, especially in light of a potential economic downturn and continuing volatility in the stock markets.
• Balance responsibilities for continued oversight of executive compensation, equity plan design, and total rewards while considering broader oversight of HCM.
• Understand the expectations of employees, investors, and other stakeholders for committee oversight of compensation and HCM.
• Consider whether including ESG metrics in incentive plans is right for your organization.
• Be mindful of the impact of new and forthcoming SEC rules.