McLagan's executive compensation practice specializes in the review and design of executive and director compensation programs for leading financial services companies. Our consultants further specialize by client type such as, global, national or U.S. regional, to better address the needs of each unique market.
Our seasoned consultants focus their energies on the executive suite and Board of Directors, working closely with senior management and compensation committees. We provide direction in benchmarking pay and performance, addressing regulatory issues and assisting in the design of current and deferred/long-term incentive plans.
Our recommendations are informed by real-time market intelligence, a wealth of valuation, tax and accounting expertise and a firm-wide commitment to tracking compensation-related regulatory developments in the financial services industry. We have a dedicated team focused on understanding Institutional Shareholder Services (ISS) guidance on problematic pay practices.
Our partnership with clients is based on our commitment to providing independent, fact-based advice related to:
- Annual and deferred/long-term incentive plan design and risk reviews
- Compensation benchmarking (peer group development, job selection, competitive positioning)
- Compensation committee support
- Director compensation
- Executive benefits
- Employee agreements/contracts
- Change-in-control and severance policies (including 280G calculations)
- Regulatory issues impacting compensation such as U.S. inter-agency Sound Incentive Compensation Policies guidance, horizontal reviews, European Capital Requirements Directive III guidelines and individual country guidance
- Valuation, tax and accounting issues impacting compensation including performance share valuation and accruals, Internal Revenue code 162(m) / tax deductibility, parachute payments / 280G triggers / excise taxes, vesting and effective receipt considerations
- ISS guidance on problematic pay practices and avoiding negative shareholder votes
Case StudyA leading Exchange engaged McLagan to assist in their demutualization/IPO process. The Exchange was in need of policies and programs relating to exec / director compensation that would allow them to compete with other public companies.
McLagan interviewed key managers, HR executives and directors to understand the firm's business objectives, the existing culture, and forward looking compensation philosophy. McLagan proposed an integrated total compensation structure which was market-based and appropriate for and consistent with their strategic initiatives.
The Board of Directors has approved the plans, and management is fully engaged and enthusiastic about the transition. The Board and shareholder representatives were pleased that there was a new framework and process against which all compensation-related decisions could be made.
The process has resulted in a more cost efficient and effective total compensation process at fiscal year-end.