Performance Management
Financial Performance Measures – their use in Incentive Plans
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 Gosling is an Executive Fellow in the Department of Finance and the Leadership Institute at LBS where he contributes to the evidence-based practice of responsible business by connecting academic research, public policy, and corporate action. He is also an Executive Fellow of the European Corporate Governance Institute, a member of the Advisory Panel at the Financial Reporting Council, and an adviser to the Steering Committee of The Purposeful Company thinktank.
In these roles Tom has researched and written extensively on executive pay, the psychology of pay and pay fairness, corporate governance, investor stewardship, corporate purpose, ESG, sustainable investing, diversity, and stakeholder capitalism. He engages extensively with corporates, investors, and policy makers including BEIS, the Financial Reporting Council and the Financial Conduct Authority. He has been asked to appear before the BEIS Select Committee on three occasions in relation to enquiries on banking standards, corporate governance, and executive pay.
Tom has 20+ years of experience as a board adviser. Most recently he was 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 a regular commentator in print, broadcast, and social media. He presents the Grow the Pie podcast with Alex Edmans, Professor of Finance at London Business School and the Responsible Business podcast, looking at the evidence base in support of responsible business.
Prior to joining PwC, Tom was a Research Fellow in the Department of Applied Mathematics and Theoretical Physics at Cambridge University.
Prof. George Feiger
Executive Dean of Aston Business School
George Feiger has been Executive Dean of Aston Business School since 2013. Previously he founded a wealth management firm; was Director of McKinsey in the US & UK; Global Head of Investment Banking for Warburg; Global Head of Onshore Private Banking for Swiss Bank and UBS; and involved in various venture capital activities. He was Lecturer of Economics at Harvard; and Associate Professor of Finance at the Stanford Graduate School of Business. He has a PhD in Economics from Harvard.
Alan Giles OBE
Chairman of The Remuneration Consultants Group and Non-Executive Director of Murray Income Trust plc
Alan is Chairman of The Remuneration Consultants Group and a Non-Executive Director of Murray Income Trust plc. He is an Associate Fellow of Saïd Business School, University of Oxford, and an Honorary Visiting Professor at Bayes Business School, City, University of London.
Alan has extensive remuneration experience, having chaired the Remuneration Committee at Foxtons plc from 2019 until 2023, and Rentokil Initial plc from 2012 until 2017. Other non-executive roles include The Competition & Markets Authority, Wilson Bowden plc, Somerfield plc and Fat Face, where he was Chairman from 2006 until 2013. Earlier in his career held senior executive roles at Waterstones, WH Smith Group and Boots. He formed HMV Group as Chief Executive in 1998 and led the Group through its London Stock Exchange IPO in 2002, before moving to a portfolio career in 2006.
He was awarded an OBE for services to business and the UK economy in 2018.
