Executive Compensation and the Role of the Compensation Committee

Compensation Discussion and Analysis

The compensation committee reports its decisions in the compensation discussion and analysis (CD&A) section of the company's Proxy Statement (also known as DEF 14A) that is filed with the SEC informing shareholders and other stakeholders about the details of the executive compensation program. The disclosures explain the executive compensation program and related administration taking these factors into account:

1. The economic and industry competitive context
2. Key business results and the impact of those results on executive officer pay
3. Decision-making for the following year based on the impact of current results and other factors
4. Compensation design related to competitive market assessment, pay-for-performance alignment, and performance measures and goals
5. Process rigor utilized for compensation risk assessment

It is expected that the compensation committee members are knowledgeable in compensation programs and pass independence tests to be members of the committee. At the end of the report, the names of all committee members are listed.

Below is a sample table of contents from a DEF 14A filing that reflects say-on-pay requirements.

REPORT OF THE COMPENSATION COMMITTEE EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction
Oversight
Compensation Philosophy and Objectives
Annual Compensation Plans Design Review
Determining Pay Levels
Base Salary
Annual Cash Incentive Awards
Stock Options
Performance Share Awards
Restricted Stock
Retirement Benefits
Deferred Compensation
Certain Perquisites and Benefit Programs
Employment Agreements
Severance Agreements
Stock Ownership Guidelines for Executive Officers
Tax Treatment of Compensation
Conclusion

Relation of Our Compensation Policies and Procedures to Risk Management Required Tables:

Summary Compensation Table
Grants of Plan Based Awards
Outstanding Equity Awards on September 30, 2021
Option Exercises and Stock Vested Table
Pension Benefits
Non-Qualified Deferred Compensation
Potential Payments Upon Termination or Change in Control
Executive Employment Agreements

DIRECTOR COMPENSATION

Retainer and Meeting Fees
Stock Options
Restricted Stock Awards
Deferred Compensation Plan
Stock Ownership Guidelines for Directors

As a best practice, include in the CD&A some helpful statistics or analytics to clearly communicate results connected to the executive compensation program such as:

• Percent of total compensation opportunity that is performance-based
• Percent of target short-term incentive achieved
• Percent of equity grant value reported that was actually realized
• Percent of total outstanding equity underwater