Stakeholder Capitalism Requires Modern Executive Compensation Plans

Brian Stafford

Executive compensation plans are a vital part of strategic oversight and subject to critical shareholder votes – and the way these plans are built needs to meet the current moment: a more remote workforce, new models of digital transformation, resilience, and ever-increasing attention on ESG and diversity, equity and inclusion (DEI) initiatives. To get executive compensation right, organizations must incorporate new data sources and bring in more stakeholders internally  not only the compensation committee and Chief Human Resources Officer (CHRO), but also the general counsel and governance executives, such as Chief Sustainability Officers.

Last year's AGMs frequently struggled to grapple with the ramifications of COVID-19. This year, stakeholders and shareholders are eager to focus on recovery and how to move forward.

The New Reality Demands Stronger Executive Compensation Plans

It's clear that the new landscape demands executive compensation and incentives to align with modern governance practices. As ESG and DEI become more important to value-driven capitalism, leaders like Starbucks have announced they will tie executive compensation plans to diversity objectives. Companies like FirstEnergy have been tying executive bonuses to diversity goals since 2018. These are not outliers. In January 2021's Director Confidence Index, 40% of the directors surveyed said they intend to tie compensation to DEI initiatives  a number that is certain to grow.

With the right groups and data and analytics involved, organizations are poised to drive more informed, meaningful compensation plans that further organizational goals like ESG and DEI.

Aligning Executive Compensation to Modern Governance Practices

As boards and executives bring in new technologies to ensure financial integrity, investor confidence, stakeholder engagement, and sustainable performance, so must executive compensation too. Incorporating data and analytics ensures more comprehensive compensation decisions.

At a time when executive compensation has never been under greater scrutiny, Diligent is committed to empowering organizations to design more equitable, responsible executive compensation plans. Today, I'm excited to share information on our offering in this space.

Diligent's Executive Compensation Solutions allow organizations to design compensation plans that serve stakeholder interests, support critical ESG and DEI initiatives, attract and retain top talent, and align with modern governance practices.  

Through Diligent's exclusive partnership with Glass Lewis, organizations have access to Glass Lewis' compensation models to understand how investors and shareholders will view their plans. With Disclosure Search, teams can quickly search millions of data points in public disclosures  a tactical way to tie compensation plans to ESG and DEI metrics. With more insight and the ability to proactively make changes, organizations propose more favorable compensation plans and achieve more progress towards their goals.  

When organizations get executive compensation right, the positive effects flow throughout the entire organization. For those interested in additional information, learn more about our Executive Compensation Solutions. The time is now.

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Brian Stafford

Brian Stafford is Chief Executive Officer of Diligent Corporation. Mr. Stafford assumed the role of CEO in March 2015 and is responsible for all day-to-day operations, with a focus on accelerating global growth and incorporating scale into the business in order to seamlessly manage the growth.

Mr. Stafford previously served as a Partner at McKinsey & Company, where he founded and led their Growth Stage Tech Practice. While there, he concentrated on helping Growth Stage Technology companies scale faster and did extensive work with Software-as-a-Service (SaaS) companies, focusing on growth strategy, sales operations and strategy, pricing, international growth strategy and team building. Prior to his tenure at McKinsey, Mr. Stafford was the Founder, President and CEO of CarOrder, a division of Trilogy Software based in Austin, Texas.

Mr. Stafford holds a Master's Degree in Computer Science from the University of Chicago and a BS in Economics from the Wharton School at the University of Pennsylvania. He currently lives in Manhattan.