Executive And Director Compensation Trends

Amidst high inflation, economic uncertainty, shareholder activism and a continued focus on the executive-to-employee pay disparity, executive compensation continues to attract heightened scrutiny. Boards of directors and senior management teams must carefully balance recruitment and retention considerations with institutional investor pressure, proxy advisory views and public perception to ensure their management teams are well-positioned to act in the long-term best interests of their companies.

Directors increasingly face criticism—and even litigation—from shareholders alleging a breach of directors' duties for what they perceive as excessive executive compensation packages or arrangements that may encourage unwarranted risk-taking behaviour. It is therefore important that board members, and particularly those on the compensation committee, obtain appropriate advice and understand in detail all elements of their organization's executive compensation arrangements.