NACD Audit Committee and Compensation Committee Chair Advisory Council: Nonfinancial Metrics, Strategy, and Culture

In brief: Nonfinancial metrics are increasing in prevalence and importance. In today’s changing business climate, choosing which nonfinancial measures to use to assess and communicate company performance has become a critical task for management teams and boards. In the fall of 2017, NACD, Farient Advisors, Katten Muchin Rosenman, KPMG, and Sidley Austin convened a meeting between Fortune 500 audit and compensation committee chairs to discuss nonfinancial metrics, strategy, and culture. From the discussion, three key insights emerged for directors:

• Link nonfinancial metrics to strategic and cultural objectives.
• Audit committees can leverage internal audit in the oversight of the quality of nonfinancial data.
• Compensation committees are focusing on the role nonfinancial metrics play in compensation plan design and in eventual payouts.

Most relevant audiences: Audit committee members and compensation committee members