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Your seasoned top executives and mid-level managers are invaluable "human capital." Are you doing everything you can to keep them on your team? When was the last time you really evaluated how you reward and recognize your veteran professionals who keep the company's "wheels in motion?" Below CBMR profiles two useful resources to help you in this important task.
Guiding principles of effective executive compensation plans.
CBMR turns first to "Executive Compensation: Principles and Commentary," a publication from Business Roundtable (Washington, D.C.; www.businessround table.org), an association of CEOs with a combined workforce of more than 10 million employees. Although most construction companies are privately held, a look at how public companies set their executive compensation can provide valuable insights.
This 10-page document, originally released in November 2003, notes that "compensation should serve the objectives of a corporation's business. Accordingly, the structure and components of an appropriate executive compensation program will vary widely among corporations due to such factors as size, industry, competitive challenges, and culture."
The report singles out two "fundamental characteristics" of any executive pay program:
1. Pay for performance.
2. An independent compensation committee.
From these principles evolve the following, which CBMR excerpts from the report:
* "Executive compensation should directly link the interests of senior management, both individually and as a team, to the long-term interests of stockholders.
* "Compensation committees and boards of directors should establish meaningful goals for performance-based compensation; payment should be tied to the achievement of those goals.
* "Afailure to meet performance goals should eliminate or reduce payments under the award, while additional compensation should be considered where goals are substantially exceeded.
* "Consideration...