The Farient Alignment Assessment is one of the most effective shareholder engagement tools on the market
Companies have benefitted from Farient Information Services rigorous assessment of pay for performance to support pay alignment goals and help anticipate or address investor concerns. For many clients, Farient provides recommendations on potential changes to compensation plan design as needed to improve (or sustain) pay for performance alignment. Farient helps companies to better understand investor issues, and address alignment concerns. Many companies have also engaged Farient to advise on proxy disclosure and communications to proactively address alignment and Say on Pay issues.
Farient’s Performance Alignment Assessments are being used by companies to clarify and diagnose many investor concerns through reviewing company pay for performance alignment, comparing a company to different peer groups and running alignment reports based on Farient’s investor-accepted pay definition – Performance-Adjusted Compensation, or PAC. One of the most valuable features of Farient’s Performance Alignment Assessment is its ability to forecast alignment over coming years, and provide clear guidance on forward-looking pay for performance alignment.
Farient Performance Adjusted Compensation (PAC) and PARs provide several advantages over other pay for performance approaches:
- Farient’s Alignment Assessment service provides clear guidance on pay for performance analysis, identifying potential causes of misalignment and recommendations on plan design, communications and shareholder engagement
- PAC matches the time horizon of pay to that of performance, by measuring all elements of long-term incentive (LTI) compensation after performance has happened
- PAC and the Alignment Zone allow for clear comparisons between companies:
- with different pay mixes, through a consistent valuation of equity awards
- of different sizes, by adjusting the Alignment Zone
- Dynamic, at-a-glace graphical presentation shows performance scenarios across the Total Shareholder Returns (TSR) spectrum, leading to quick insights on alignment and potential pay issues
- Provides a perspective on compensation trends based on current and historical data
- Addresses fiduciary concerns dealing with aligning management compensation to long-term shareholder interests
Whether alignment is strong or needs improvement, an Alignment Assessment by Farient provides great value to Human Resources, management and boards: