Business and Markets

Modern Principles for Sensible and Effective Executive Pay

September 16, 2020  • Business and Society Program

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The job of the CEO has changed and public expectations of business are shifting—but changes in how we reward executives have not kept pace. With the Executive Pay & Governance team at Korn Ferry, we offer five principles of executive pay and questions to facilitate board conversation about the need to align purpose and rewards, define fairness, simplify pay structure and turn down the volume on Total Shareholder Return to make room for non-financial (‘ESG’) contributors of real value—employee and community well-being, an inclusive culture, sustainable use of natural resources and attention to long term risks.

The Modern Principles of Sensible and Effective Pay are the product of over two years of research and dialogue among board directors, investors, scholars and experts in governance and compensation working to assure the long term health of business and capital markets. We invite you to explore the Principles and experiment with these questions. We welcome examples of pay policy and practice that help move us forward.

These Principles are a product of the Aspen Institute Business & Society Program and were produced in partnership with the Executive Pay & Governance team at Korn Ferry.