NACD Compensation Committee Chair Advisory Council: Effective Practices for Goal Setting and Using Nonfinancial Metrics

In brief: Corporate executives are navigating an increasingly complex business environment, and directors might wonder what effective practices they should consider when setting goals for CEO performance and pay.

At a recent meeting of the NACD Compensation Committee Chair Advisory Council, Fortune 500 directors discussed the following topics:

• Choosing goals and metrics based on company strategy and value drivers.
• Factoring in relative performance versus peers.
• Using nonfinancial metrics to drive behavior.
• Engaging with investors to clarify the link between compensation goals, metrics, and strategy.

This resource can help your board:

• Consider when the use of nonfinancial metrics is appropriate.
• Understand how other boards incorporate relative performance versus peers into the compensation plan.

Most relevant audiences: Compensation committee members