Segal Company

Corporate/Board Governance

Our work with executives and boards focuses on people, practices, and policies. The application of these elements begins to define the behavioral dynamics of a corporate board. Within these elements, we hone in on six critical areas (composition, rewards, operating discipline, dynamics, development, and compliance and disclosure) to ensure directors are prepared to assume their roles, make informed decisions, operate with integrity, and are appropriately rewarded for their contribution.

Director Compensation

We work with boards to evaluate director compensation policies and practices to ensure they are both competitive and aligned with the company's director pay philosophy. We analyze, and redesign as appropriate, all compensation elements: cash retainers and meeting fees, annual equity grants, and committee compensation, including meeting fees and retainers, chair and lead director compensation. We focus on issues such as the following:

  • Are board members being compensated appropriately for the investment they are making in the company?
  • How does the director pay program reinforce the directors' role as a company fiduciary?
  • What is the appropriate mix of cash versus equity and board versus committee pay?
  • Given the operating dynamics and meeting schedule of the board, should payments be weighted towards meeting fees or retainers?
  • Are ownership and holding requirements necessary, and if yes, how should they be structured?

Compensation Philosophy and Guiding Principles

We work with clients to develop a compensation philosophy that articulates the role of compensation in supporting the strategic business objectives, performance requirements, and talent needs of the organization.

We consider a compensation philosophy to be the foundation for the compensation system. It is the compass for designing, administering, communicating, and governing compensation policies and programs. Post-design, it becomes the means for measuring how programs are delivering against the philosophy's intent.

In developing a compensation philosophy, we address the following issues:

  • What is the role of compensation in driving desired performance results and behaviors?
  • What performance criteria should be reinforced?
  • How should total compensation compare to that of peers in the company's competitive framework?
  • What is the desired mix and relative prominence of fixed and variable compensation?
  • What types of compensation programs and delivery vehicles will best align with the compensation strategy?
  • What are the roles, responsibilities, and decision rights for the design, approval, and management of compensation programs?

Corporate Governance Design and Effectiveness

A well-governed board helps build goodwill, value, efficiency and effectiveness. As advisors to boards, our work focuses on the outcomes of effective governance. Our goal is to help boards operate in a way that correlates to better company performance and enhances competitive advantage. This involves making sure that directors are prepared to take on their accountabilities and also grow and serve the organization to their best ability. We work with clients to ensure that onboarding exists to get directors acclimated and that rotation is used to broaden director expertise. In addition, we help clients address issues such as the following:

  • How are the rules of engagement for board dynamics articulated and shared with directors?
  • Are committee charters in place? How are decision rights communicated to ensure they are unambiguous and understood by all directors?
  • What mechanisms exist to ensure directors get the right information in a timely manner in order to fulfil their fiduciary obligations?
  • How are directors kept abreast of legislation and regulations?
  • How can evaluation programs be used to improve Board contributions and overall governance effectiveness?

Board Evaluations

Evaluation helps to improve the effectiveness of individual directors, committees, and the board as a whole. We work with clients to design and administer evaluations, whether annual or bi-annual, that enables the board to take stock of strengths and pinpoint developmental needs. We provide feedback and advise boards on ways to address potential issues.

  • What mechanisms are in place to assess the performance of the board, committees, and individual members?
  • To what extent do directors fully participate in evaluations?
  • How is assessment results acted on in order to improve performance?
  • How is feedback delivered to the board, committees, and to individual members?
  • How are skill and experience deficiencies bridged through recruiting and development?