Remuneration Calendars for Boards and Management: Why and How the Best Companies Use Them

by admin

Remuneration Calendars for Boards and Management: Why and How the Best Companies Use Them

by admin

by admin

Abraham Lincoln once said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” He was suggesting that a well-thought-out plan of action is an indispensable step on the path to success.

Our own (far less poetic) motto goes something like this: Plan your remuneration strategy at the start of the year for success at the end of it.

And one of the best ways of transforming a remuneration strategy into tangible outcomes is to create and manage a remuneration calendar.

Jump to our FREE interactive 2022 Remuneration Calendar template designed for Board members and Management teams below!

Why companies should have a remuneration calendar

When we refer to a remuneration calendar, we’re not suggesting a payroll calendar tracking pay dates. We’re referring to a date-driven plan of action that aligns a company’s remuneration activities to support business and shareholder outcomes. It outlines key meetings, decision-making deadlines, what is being asked of stakeholders and reporting requirements for a company at important checkpoints throughout the year.

Remuneration calendars can be useful tools for both the Board and Management. Boards (and where applicable their Remuneration Committees) utilise a calendar to set an agenda for each meeting to help them stay focused on what is in their purview or charter e.g., accountable for overseeing the company’s executive remuneration programs. Increasingly, the remuneration charter is broadening to provide the board/committee with oversight of a company’s people programs beyond remuneration (e.g., succession planning, diversity and inclusion initiatives).

We see successful Management teams using the remuneration calendar to align with the board/committee (remuneration) charter and ensure they monitor and identify improvements to remuneration effectiveness, administration and implementation in accordance with the remuneration policy.

How the best companies design their remuneration calendars

There is no one-size-fits-all solution to creating a remuneration calendar. Each business will have different inclusions (e.g., meeting schedules, calendar milestones and compliance requirements) depending on the size and stage it’s at. The design may also vary depending on whether the company is a public entity with different governance and disclosure requirements.

That said, the task of drafting a remuneration calendar doesn’t have to be a daunting one. Just follow these three steps and tailor to the business as required.

Step one – Determine what should be included

When preparing a remuneration calendar, start by considering what remuneration and related activities happen over the year, when they are undertaken and who is involved (a RACI methodology can be handy to guide this process).  The following table provides a general overview of key remuneration matters to consider for the calendar and what role the Board/Committee and Management typically play.

Fig. 1

Remuneration item
Role of the Board/Committee
Role of Management
CEO / executive remuneration quantum and structure
  • Set CEO and executive remuneration quantum, structures and incentive opportunity
  • Provide analysis and research to assist the Board/Committee
Incentives and variable remuneration
  • Approve measures and performance targets relating to the incentive plans
  • Determine the extent to which targets have been achieved
  • Recommend incentive performance conditions in line with the company’s strategy
  • Undertake analysis to validate and test performance outcomes / scenarios
Employee share schemes (equity programs)
  • Approve equity remuneration programs
  • Approve eligibility
  • Approve equity grants
  • Recommend equity programs
  • Recommend eligible employees to participate in equity programs
Remuneration governance and administration
  • Oversee the remuneration practices of the company (e.g., remuneration strategy input and approval)
  • Recommend improvements to remuneration programs and strategy
  • Administer remuneration processes and review for effectiveness

Step two – Allocate the activities

How a company allocates each remuneration activity across the year often aligns with the typical cadence of  remuneration committee meetings being four times per year. To illustrate, Fig 2. provides a high level example how remuneration activities may coincide to the relevant company focus points each quarter (Q1 to Q4).

Fig 2.

quarterly remuneration actions

 

Step three – Monitor, prepare and meet as required

With the remuneration activities confirmed in the calendar, Board and Management actively monitor and prepare materials in advance of the milestone date. Allowing sufficient time to review and consult with the relevant stakeholders should be factored into timelines to ensure an effective meeting. The following example schedule leading up to a Board/Committee meeting provides important stakeholder engagement and allows sufficient time to review materials:

  • 4 – 6 weeks out management confirms the agenda
  • 2 – 3 weeks out management shares draft materials with the Board/Committee Chair
  • 1 week out management issues final papers with the Board/Committee

When finalising the agenda for an effective meeting, ensure items are prioritised to allow for the necessary time depending on the topic and what is being requested e.g., approval items are typically grouped at the front of the agenda with noting and discussion items at the end of the meeting schedule.

 

Receive our FREE interactive 2022 Remuneration Calendar

 

Are you looking for a bit of guidance when it comes to drafting a remuneration calendar this year? The good news is we have taken some of the guess-work out of the process for you.

Our downloadable interactive remuneration calendar template is now available for both Board and Management. The calendar represents best practice and contains:

  • Relevant reporting dates for companies
  • Suggested quarterly actions
  • Timely reminders and alerts

This calendar is in .ics format and is compatible with most calendar apps including Microsoft Outlook, Mac OS Calendar, Google Calendar and more. The file comes with instructions on how to import into the above mentioned calendar applications and is editable so you can tailor it to your organisation.

You will also be subscribed to our newsletter so you can stay up to date as we’ll be monitoring the calendar and issuing reminders as key milestones appear on the horizon!

* indicates required field
By submitting this form, I agree to receive communications from The Reward Practice. I understand that my data will not be shared with any unnecessary third party and I can unsubscribe at any time. View our Privacy Policy.

Once you have submitted the form, you will receive an email to confirm your subscription. Once your subscription is confirmed, you will receive an email containing the calendar download file. Please allow up to an hour for delivery as there may be a delay for some email servers.

*If you do not receive the messages in your inbox, please check your SPAM or junk mail folders.

 

Receive Our Latest InsightsThe 2021/22 Remuneration Pulse Report

NEW Remuneration Pulse Survey results from May 2022 & Dec 2021, featuring data from 80 companies across Australia.