Towers Watson Launches Principles and Elements of Effective Executive Compensation Design

Innovative framework can help companies make better executive pay decisions

NEW YORK--()--Towers Watson (NYSE, NASDAQ: TW), a global professional services company, announced today that it is launching a comprehensive set of principles to help guide companies in evaluating and designing executive compensation programs that support the creation of sustainable long-term value.

Towers Watson’s Principles and Elements of Effective Executive Compensation Design offers fresh perspectives and practical guidance on all facets of pay program design and governance, including peer-group selection, incentive plan design, pay-for-performance assessment, contractual terms and conditions, and special circumstances such as executive transitions and M&A. The principles were developed over the past two years with the input of hundreds of corporate directors and managers, as well as Towers Watson’s senior Executive Compensation consultants.

“Our principles meet an unfilled need in the market for comprehensive and detailed guidance about compensation design and the critical elements that drive pay program effectiveness,” said Mark Reid, global head of Executive Compensation consulting at Towers Watson. “What we learned from our research is that opinions about what’s wrong with executive pay abound, but clear and unbiased guidance to help companies set pay appropriately is rare.”

To complement this guidance, Towers Watson has developed a diagnostic tool that its consultants use in analyzing how closely companies’ pay programs are aligned with the principles. Using this assessment tool, Towers Watson consultants conduct in-depth analyses to help clients articulate the rationale behind their existing programs and highlight areas that may warrant consideration.

The principles and assessment tool can be applied across a wide range of organizations globally, although their primary focus is on the complex and highly visible pay issues facing public companies in mature markets.

“Our research has identified a growing conformity in pay practices as well as concerns from a range of stakeholders, including investors and directors, about the current state of executive pay and the role of proxy advisors and other organizations seeking to define best practice,” said Todd Lippincott, leader of Towers Watson’s executive compensation consulting business in the Americas. “Our principles provide a solid framework to support companies in moving beyond a compliance orientation to design pay programs that reflect a company’s specific strategy and overall business context. Our principles are not prescriptive, but rather are designed to help companies tailor their pay programs to support their unique recipes for success.”

More information about the principles is available at http://www.towerswatson.com/en/Insights/IC-Types/Ad-hoc-Point-of-View/2014/04/towers-watsons-principles-and-elements-of-effective-executive-compensation-design

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers consulting, technology and solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson has more than 14,000 associates around the world and is located on the web at towerswatson.com.

Contacts

Towers Watson
Ed Emerman, +1 609-275-5162
eemerman@eaglepr.com
or
Binoli Savani, +1 703-258-7648
binoli.savani@towerswatson.com

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Contacts

Towers Watson
Ed Emerman, +1 609-275-5162
eemerman@eaglepr.com
or
Binoli Savani, +1 703-258-7648
binoli.savani@towerswatson.com