1. Executive Remuneration:
A look inside the boardroom
Jo Cornu & Xavier Baeten

2. A starter…

3. “Pay seems not so much
for performance but
regardless of
performance”
“The system is sick”
4| © Vlerick Leuven Gent Management School

4. Citigroup investors
vote against new pay
deal for Pandit
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8. “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.”
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11. © Vlerick Leuven Gent Management School PwC & London School of Economics and Political Science

12. 13 | © Vlerick Leuven Gent Management School PwC & London School of Economics and Political Science

13. 14 | © Vlerick Leuven Gent Management School PwC & London School of Economics and Political Science

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15. Performance‐related remuneration

16. Composition of the package
% Fixed % Short‐term % Long‐term
incentives 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 | © Vlerick Leuven Gent Management School
Filatotchev & Allcock (2010)

17. Performance measures used in
short‐term incentive plans
18 | © Vlerick Leuven Gent Management School
Executive Remuneration Research Centre (2011)

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20. Topics for discussion
What is the ‘right’ proportion of
variable remuneration?
Which performance criteria should be included in
variable remuneration?
Financial – non‐financial
Timeframe
Sense and nonsense of long‐term incentives
Stock options
Shares
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21. The remuneration committee

22. Decision‐making on executive remuneration
Shareholder
Remuneration
Board of directors committee
Consultant(s)
Management CEO
Finance
HRM/Comp & Ben
© Vlerick Leuven Gent Management School

23. What determines the composition of the
remuneration committee?
• Outside directorships
Expertise • Board tenure
• Board tenure relative to CEO
Independence • Executive directors of other firms
• Size
• Age
• Board tenure
Diversity
• Gender
• Nationality
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24. Topics for discussion
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 committee
What about the remuneration committee in
nowaday’s context?
Public scrutiny
Regulation
Say‐on‐pay
25 | © Vlerick Leuven Gent Management School

25. HR’s role

26. HR’s role?
HR
HR
HR
Translator Navigator Influencer
27 | © Vlerick Leuven Gent Management School Bolster & Quirck (2010)

27. What drives executive remuneration?
© Vlerick Leuven Gent Management School

28. Topics for discussion
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?
29 | © Vlerick Leuven Gent Management School