Read the second of four summaries from the 2020 annual meeting of the Salzburg Global Corporate Governance Forum - Putting Directors to the Test: How Does Leadership Measure Up in a Time of Crisis? The Salzburg Global Corporate Governance Forum was held online for the first time in October 2020
The 2020 annual meeting of the Salzburg Global Corporate Governance Forum took place virtually this year due to the pandemic. At "Putting Directors to the Test: How Does Leadership Measure Up in a Time of Crisis?" from 9-10 October 2020, 58 participants spread across 18 time zones, mainly directors and principals of corporations on four continents supplemented by additional stakeholder voices, explored crisis response and leadership, addressing what it takes for a business to survive an existential threat, and how companies should tackle both the distinct issues and converging risks around income inequality, COVID-19, climate change, and broader issues of systemic inequality.
This online program – sponsored by BNY Mellon, CLP Group, the Diligent Institute, and Elliott Management Corporation, with university partner Simon Fraser University Beedie School of Business, Centre for Corporate Governance and Sustainability – consisted of four highly-interactive modules that facilitated participants engaging in candid, in-depth, and practical discussions in a conversational non-webinar format over two days. The first discussion asked, "Shared prosperity: What is the role of the compensation committee in addressing income inequality?"
Salzburg Global Seminar would like to thank the Forum's Advisory Committee members for their programmatic advice, insight, and support in leading these conversations. Members include Melissa Obegi (Chair), Stephanie Bertels, Walt Burkley, John J. Cannon III, Bharat N. Doshi, Christopher F. Lee, Simon M. Lorne, and Robert H. Mundheim.
One of the board’s crucial functions is determining and setting competitive pay packages to attract and retain key executives. There have been calls for compensation committees to broaden their focus to tie executive compensation to longer-term outcomes and environmental, social, and governance performance; and address compensation across the organization - even in their supply chain.
Income inequality, particularly workforce compensation, has become a flashpoint in the current crisis. In response, there has even been the suggestion that the board compensation committee might play a role in ensuring fair compensation for all employees. Together, Fellows participating in the program asked whether compensation committees should provide oversight across all workforce compensation levels. Participants were asked: Should compensation committees ensure that all workers are fairly compensated for their contributions to value creation? What role should compensation committees play in the case of outsourced or supplier workers?
In many jurisdictions, economic insecurity and inequality have risen in lockstep with the pay awarded by compensation committees to senior management. As a result, there are criticisms that employees do not enjoy an equitable share in the corporate sector's increasing profitability. It may be time to revisit the mandate and work of the corporate compensation committee.
We encourage readers to share your comments by joining in the discussion on