Performance Management

Financial Performance Measures – their use in Incentive Plans

  • In Person Events
  • November 4, 2021 @ 5:00 pm - 6:30 pm UTC+0

This event is running as a hybrid event, both in-person and online.

As a follow-up to the excellent introductory session on Financial Performance Measures with Alex Edmans in July, this meeting will examine in detail the use of such measures in both annual and longer-term incentive plans.

Having now considered what is meant by corporate (and management) performance – from the perspective of different stakeholders – we now turn to the complex task facing the Remuneration Committee of how to link performance to an appropriate level of reward.

In this session, Tom Gosling, will share his learnings as a former reward consultant to major international companies – as complemented by the broader range of responsible business issues in his current role at the LBS Centre for Corporate Governance, for whom he has just completed an academic survey paper on how boards and investors set CEO pay. Tom’s views will be challenged in discussion with guest speakers representing RemCo and investor perspectives, namely George Feiger and Alan Giles, as well as the diverse experience of PARC members.

Examples of the critical areas to be covered include:

  • The different types of financial measure – and how they align with value
  • The problems of looking at individual measures in isolation
  • The relevance of different measures for either short-term or long-term plans, including those measures that show stronger correlation with long-term share price
  • The extent to which measures are subject to management control, and the tension between alignment with inputs vs alignment with shareholder value
  • Treatment of complex adjustments such as impairment charges
  • Selecting appropriate comparator peer groups
  • Discretion – when, why, and how boards should over-ride formulaic outcomes

In the aftermath of the Covid pandemic, the scrutiny placed on corporate performance and justifiable reward is probably higher than it has ever been. RemCo chairs are keenly aware of the need to drive performance improvement, while balancing the interests and sensitivities of multiple stakeholders. Being seen to ‘do the right thing’, and setting the right performance measures and targets looms large on the Board agenda.

This session will combine expert input with a facilitated discussion, drawing out the wide range of knowledge from PARC members and guests. It will provide invaluable input for those reward and HR leaders accountable for designing reward policies for the coming years.

This is the second session in our Performance Trilogy. Session 3, which will focus on ESG and other critical non-financial measures, is scheduled for our 2022 programme.

Speakers

Tom Gosling

Executive Fellow, London Business School

Tom is an Executive Fellow in the Department of Finance at LBS where he contributes to the evidence-based practice of responsible business by connecting academic research, public policy, and corporate action. He works with the Centre for Corporate Governance and the Leadership Institute at LBS. He has 20+ years experience as a board advisor. Most recently as a senior Partner at PwC where he established and led the firm’s executive pay practice, advising FTSE-100 and equivalent private and European companies on corporate governance and executive pay. Tom is also a member of the Steering Committee of The Purposeful Company, a think tank devoted to identifying ways in which the UK corporate governance environment can be developed to support companies that create profit through fulfilling a purpose that benefits society. Tom is a regular commentator in print, broadcast, and social media. He presents the Grow the Pie podcast series with Alex Edmans, Professor of Finance at London Business School, looking at the evidence base in support of responsible business. Tom has a PhD in Applied Mathematics and is a Qualified Actuary.

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George Feiger

Executive Dean of Aston Business School

George Feiger has been the Executive Dean of Aston Business School since June 2013, returning to the academic world, in which he began his professional career. From 2003 to 2013 George was the founder and CEO of Contango Capital Advisors, a wealth management fi rm in San Francisco. George has also been a Director of McKinsey & Co, working in the US and the UK, the Global Head of Investment Banking for SBC Warburg, the Global Head of Onshore Private Banking for Swiss Bank Corporation and then for UBS and a member of the Group Management Boards of both companies. He has also been involved in a variety of venture capital activities.

George has been a frequent commentator on economic and financial topics in a variety of media and was a Lecturer in Economics at Harvard and then Assistant and Associate Professor of Finance at the Stanford Graduate School of Business. He holds a B.Econ (Hons) from Monash University and a PhD in Economics from Harvard University. He was also a Junior Fellow in the Society of Fellows at Harvard.

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Alan Giles

Chairman, The Remuneration Consultants Group and Director, Foxtons plc

Alan is Chairman of The Remuneration Consultants Group, Senior Independent Director and Remuneration Committee Chair of Foxtons plc, and Senior Independent Director of Perpetual Income & Growth Investment Trust plc. He is also an Associate Fellow of Saïd Business School, University of Oxford where he chairs the Advisory Board of the Oxford Institute of Retail Management, and an Honorary Visiting Professor at Cass Business School, City, University of London, where he is Deputy Chair of the Advisory Board of the Mergers & Acquisitions Research Centre.

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  • Development programmes for future reward leaders