NACD Perspectives Paper: Pay for Performance and Supplemental Pay Definitions

In brief: This document outlines NACD’s points of view on executive pay-for-performance principles and supplemental pay definitions such as realized and realizable pay. It is informed by years of NACD research and extensive conversations with compensation committee chairs and members, the broader corporate director community, major shareholders, and other stakeholders. Another important source of input has been the Compensation Committee Chair Advisory Council—a group of Fortune 500 compensation committee chairs, leading institutional investors, and other stakeholders convened by NACD in collaboration with advisory council partners Farient Advisors and (at the time of publication) Gibson, Dunn & Crutcher.

This resource can help your board:

• Determine baseline definitions of pay for performance.
• Create a methodology for presenting pay-versus-performance analysis, including communications related to realized and/or realizable pay.
• Enhance pay-for-performance disclosure for the CEO and other named executive officers (NEOs) in the proxy statement.

Most relevant audiences: Compensation committee members