The CHRO’s Guide to The Expanded Role of the Compensation Committee | HR Policy Association

HR Effectiveness

This newly published 16-page paper provides insights into how the role of the Compensation Committee continues to expand beyond its traditional charter. The ideas and learnings are based on interviews with 24 Compensation Chairs, CHROs, and Compensation Consultants across multiple sectors. The paper begins by outlining various factors driving the evolution of the Compensation Committee’s charter, such as institutional investors placing greater emphasis on talent strategy, ESG, and diversity and inclusion, to name a few. A few insights from the report include: 1) New Topics. One of the most common new practices of the Committee is talent management and succession planning for key leadership positions below the C-suite. 2) Meeting Duration and Agenda. Most companies have increased to at least five Compensation Committee meetings per year. Using a mix of in-person and virtual meetings, the average duration of these meetings is approximately 90 minutes, with many companies devoting 20-30 minutes of every meeting to talent; a segment of firms dedicate one or more full meeting sessions a year to talent. 3) Member expansion. While the core members of management taking part in meetings continue to be the CEO, CHRO, Head of Rewards or Executive Compensation, and Corporate Secretary, guests often include the Chief Diversity Officer and Head of Talent, and occasionally the Head of Corporate Social Responsibility. Other ideas are discussed and there is a collection of sample expanded charters/ calendars in the appendix. The guide is helpful to both new and experienced CHROs and those whose work informs the expanded agenda of the Compensation Committee.

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