Compensation & benefits - Jo Cornu & Xavier Baeten

Executive Remuneration: A look inside the boardroomJo Cornu & Xavier Baeten

A starter…

© Vlerick Leuven Gent Management School4 |

“The system is sick”

“Pay seems not so much for performance but

regardless of performance”


Citigroup investors vote against new pay

deal for Pandit


“Carlos Brito, the chief executive of AB InBev, is in line for a potential €138m, his share of a bonus pot worth €1.2bn that was set aside for top executives at the brewer of Budweiser and Stella Artois for

meeting debt reduction targets.”

Performance‐related remuneration


Composition of the package

% Fixed % Short‐term incentives

% Long‐term incentives

US 23% 17% 60%

UK 40% 38% 22%

Japan 71% 12% 17%

Belgium 52% 26% 22%

France 44% 25% 31%

Germany 39% 47% 14%

The Netherlands 51% 28% 21%

17 | Filatotchev & Allcock (2010)


Performance measures used in short‐term incentive plans

18 |Executive Remuneration Research Centre (2011)


Topics for discussion

What is the ‘right’ proportion of variable remuneration?Which performance criteria should be included in variable remuneration?Financial – non‐financialTimeframe

Sense and nonsense of long‐term incentivesStock optionsShares

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The remuneration committee


Decision‐making on executive remuneration

Shareholder

Board of directorsRemunerationcommittee

Consultant(s)

Management CEOFinanceHRM/Comp & Ben


What determines the composition of the remuneration committee?

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Expertise • Outside directorships• Board tenure

Independence• Board tenure relative to CEO• Executive directors of other firms• Size

Diversity• Age• Board tenure• Gender• Nationality



What is the added value of a remuneration committee?Listed – non‐listed firms

What does a well‐composed remuneration committee look like?Scope of the remuneration committeeWhat about the remuneration committee in nowaday’s context?Public scrutinyRegulationSay‐on‐pay

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HR’s role


HR’s role?HR Translator HR Navigator HR Influencer

27 | Bolster & Quirck (2010)


What drives executive remuneration?



What can/should remuneration committee members expect from HR? What is HR’s role?(How) can HR provide independent advice to the remuneration committee?Consultants & benchmarking: upward effect?

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Compensation & benefits - Jo Cornu & Xavier Baeten

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