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Ten Recommendations to Align Executive Compensation With Strategy

WASHINGTON, June 2, 2015 (GLOBE NEWSWIRE) -- The National Association of Corporate Directors (NACD), the advocate for the profession of directorship, today announced the release of the Report of the NACD Blue Ribbon Commission on the Compensation Committee.

With the recent release of the SEC's proposed rule on pay-for-performance disclosure, the focus on the board's compensation committee has never been sharper. The components of compensation plans and the link between compensation and company performance are under intense scrutiny from shareholders, employees, policymakers, the media, and other stakeholders. Nearly 60% of respondents to the 2014–2015 NACD Public Company Governance Survey reported that their boards expanded compensation explanations in the companies' proxy statements as a result of shareholder feedback, and almost one-third of these boards changed executive compensation plans outright in response to pressure from investors.

"Setting executive compensation may be the most important and most challenging responsibility shouldered by boards," said Barbara Hackman Franklin, chair of the Blue Ribbon Commission; director, Aetna; chair emerita, NACD. "Compensation plans communicate not only the strategic goals the company wants to achieve, but also how it wishes to accomplish them."

The report highlights the new environment in which compensation committees—and, more broadly, boards—are now operating. It recommends that the compensation committee and board work together to establish an executive compensation philosophy that supports the company in creating long-term, sustainable value.

The publication includes ten specific recommendations for compensation committees to consider when evaluating their compensation philosophies. It also provides practical tools, such as sample compensation committee charters, a compensation committee assessment, and examples of financial and non-financial performance metrics.

"Our recent Blue Ribbon Commission report on recalibrating the board's approach to corporate strategy advised directors to be more engaged throughout the year," said Ken Daly, NACD CEO. "This increased involvement includes both development and execution, which is inexorably tied to compensation. Our new report offers critical guidance and tools to help compensation committees ensure alignment between strategy and pay practices."

The Report of the NACD Blue Ribbon Commission on the Compensation Committee is exclusively available to NACD members and can be found at http://nacdonline.org/CompBRC.

About NACD

The National Association of Corporate Directors (NACD) is the advocate for the profession of directorship and is focused on advancing exemplary board leadership. Informed by more than 35 years of experience, NACD delivers insights and resources that more than 16,000 corporate director members rely on to make sound strategic decisions and confidently confront complex business challenges. NACD provides world-class director education programs, national peer-exchange forums, and proprietary research to promote director professionalism, ultimately enhancing the economic sustainability of the corporate enterprise and bolstering stakeholder confidence. Fostering collaboration among directors, investors, and governance stakeholders, NACD is shaping the future of board leadership. To learn more about NACD, visit www.NACDonline.org. To become an NACD member, contact Kelly Dodd at kkdodd@NACDonline.org or 202-380-1891.

CONTACT: Media Contact: Henry Stoever Chief Marketing Officer 202-775-0509 hstoever@NACDonline.orgSource:National Association of Corporate Directors