How Discretion Can be Used Effectively in Annual Incentive Plans
Posted by Daniel Rodda on April 24, 2021 in Video
Discretion can be a valuable tool for compensation committees to ensure payouts are aligned with the organization’s performance and strategic goals. Most importantly, discretionary components require well-defined criteria for how the compensation committee will evaluate performance.
In this three-minute video, Daniel Rodda, Partner at Meridian Compensation Partners, shares 3 strategies for using discretion effectively in annual compensation plans:
- Building trust, transparency, and openness between executives and compensation committees
- Evaluating performance of discretionary components regularly throughout the year
- Understanding how various stakeholders including employees, shareholders, and proxy advisors will perceive final payout decisions.
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