How can you determine if executive compensation is fair?

I agree that when you’re assessing executive compensation, you should look at the CEOs compensation, the financial performance of the company and I also look to evaluate the compensation of executive, peers. I would ask the CEO or head of HR to explain to me, the competition philosophy, the elements of rewards at the organization, and then how others in pier roles are lined the market. And the key there is that you’re asking for market alignment details you’re not asking for specifics of any individuals compensation. So example of this would be a few sad. I’m really excited for this opportunity, could you please tell me how market aligned the CMO is to the market.

A thorough and multidimensional approach is necessary to evaluate CEO compensation's fairness, taking into account both financial and non-financial variables. To make sure that remuneration is in line with organizational goals and industry norms, it's crucial to encourage transparency, interact with pertinent stakeholders, and seek professional guidance when necessary.

Compare the executive compensation with industry standards and benchmarks to gauge whether it aligns with similar roles in comparable companies. Consider economic conditions, company performance, and industry trends that may impact executive pay.

Break down the executive compensation package into its components, such as salary, bonuses, stock options, benefits, and perks. Evaluate the proportion of each component relative to the executive's responsibilities, performance, and contributions to the company.

Examine the company's public disclosures regarding executive compensation, including proxy statements, annual reports, and SEC filings. Look for transparency in how executive compensation decisions are made and disclosed to shareholders and the public.

Seeking feedback when it comes to compensation is critical, and I also advise an element of caution as to who you seek feedback from. There are many individuals that think they are compensation and Rewards experts. At executive level, you really want to have refined specific data for your industry, your sector, and the geography for which you live. If you cannot access direct compensation, salary, survey information, then I would recommend looking at the ranges and salary details posted for the role if they are provided. Another source that I have found to be quite reputable is salary.com. Remember, the specifics matter!

Gather input from shareholders, stakeholders, and governance experts on their perceptions of the fairness of executive compensation. Consider conducting surveys or engaging in dialogue with relevant parties to understand diverse perspectives.

Stay updated on any changes or updates to executive compensation plans, including adjustments in response to company performance, market conditions, or regulatory requirements. Monitor for any red flags or controversies related to executive pay that may warrant further investigation.

Assess the impact of executive compensation on overall company performance, employee morale, shareholder value, and long-term sustainability. Consider whether the compensation structure incentivizes desired behaviors and aligns with the company's strategic goals.

Take into account broader societal considerations, such as income inequality, fairness, and social responsibility, when evaluating executive compensation. Consider the perceptions of various stakeholders, including employees, customers, regulators, and the public, regarding the fairness of executive pay practices.