Farient believes it’s all about performance-based pay.
Farient has been focused on Pay for Performance Alignment since the early days of executive compensation consulting. With the publication of our CEO Robin Ferracone’s definitive book, “Fair Pay, Fair Play: Aligning Executive Performance and Pay” in 2010 (before Dodd-Frank became law), we literally wrote the book on this topic, and Farient has been the industry leader in defining and measuring pay for performance alignment. Sure, everyone talks about performance-based pay as the holy grail of executive compensation, but in our experience, there is often confusion about what pay for performance means, and how to align executive interests with shareholder interests. To provide a framework for both corporations and shareholders, Farient continues to make significant investments in proprietary methodologies and thought leadership that are changing the way stakeholders look at pay for performance alignment and the requisite disclosures.
Farient focuses on technology through our Farient Information Services (FIS) group. This division of Farient is dedicated exclusively to pay for performance alignment, providing both an Alignment assessment service for companies as well as a pay for performance subscription database for investors. With extensive databases and proprietary research capabilities, FIS has produced ground-breaking research including Pay Definitions: What Works Best in Pay for Performance Alignment and Performance Metrics and Their Link to Value.
Farient continues to leverage our proprietary pay measure designed specifically for pay for performance evaluation – Performance-Adjusted Compensation (PAC) We encourage you to check out our report referenced above that compares and evaluates the three most widely used pay definitions – Realized Compensation, Realizable Compensation, and Performance Adjusted Compensation.
Third, Farient’s Performance Alignment Reports™ (PARs) provide both companies and investors a clear, consistent and comparable evaluation of Pay for Performance alignment. “Fair pay” happens when total compensation, after performance has been factored in, is:
– Reasonable relative to market comparables and for the performance delivered
– Sensitive to company performance over time
It was clear to Farient that investors needed a transparent, effective approach to evaluating pay for performance. Farient’s PARs™ and Forecaster™ provide clear, graphical, “at a glance” analysis and ratings to shareholders, boards of directors and management, fully supporting Farient’s view of market convergence on pay for performance today and into the future.
Fair pay, or aligned pay, is when total compensation after performance has been factored in, is sensitive to company performance over time, and is reasonable relative to the market for executive talent and the performance delivered.