Shaping the RemCo Strategy – will COVID/ESG change the shape of the reward discussion?

Date Posted:Mon, 26th Sep 2022

Shaping the RemCo Strategy – will COVID/ESG change the shape of the reward discussion?

 

How is ESG shaping the RemCo strategy? Louise Chaplin, Head of Board Practice at Eton Bridge Partners, hosted an engaging and well-attended webinar on the subject. She was joined by an expert panel comprising:

- Tea Colaianni: Chair of RemCo at Watches of Switzerland Group Plc and DWF Group Plc
- Boris Huard: NED and RemCo chair, Dotdigital PLC
- Louis Cooper: CEO of the Non-Executive Directors’ Association

Remuneration policies should support strategy and the long-term success of an organisation. They should focus on six main areas:

  • Clarity
  • Simplicity
  • An understanding of reputational and behavioural risk
  • Predictability in the explanation of the range of rewards
  • Proportionality in terms of relevance to the organisation’s position
  • Alignment to corporate, risk, board and pay culture

At Eton Bridge Partners, we have seen in recent board-level hires a rise in the importance of the Environmental, Social and Governance considerations – now more commonly referred to as ‘ESG’. The understanding of an organisation’s ESG strategy, and its implementation, is a key part of the interview process.

Two years ago, it was relatively uncommon for ESG to be a key thread – now it is unusual not to discuss it.

It is essential that a board demonstrates leadership and sets the right tone on the issue. Louis said: “We need a call to action to make sure we have a prioritised plan that can be followed through – that really needs to be driven from the board, with support from the remuneration committee.”

With ESG now a key strategic element on the radar, it is also important that a board considers what is happening in the day-to-day running of an organisation and how its culture, and the behaviours of the people within it, are managed appropriately from the perspective of implementing a Remuneration Committee (‘RemCo’) strategy that incorporates ESG considerations.

Click here to watch the full discussion

Attendees were invited to share the extent to which ESG policies had been embraced by their organisations, and to which they are influencing the RemCo discussion.

How prepared is your organisation in dealing with ESG concepts?

Tea reported that one business with which she is involved is “incredibly advanced”. It has a comprehensive strategy on climate action, diversity and inclusion, empowering colleagues and communities, and building trust. She said: “This organisation sees ESG as giving it a commercial advantage, as well as being the ethical thing to do.”

ESG should be mainstream to the RemCo discussion, Boris has seen. “In purpose-led organisations, that opportunity goes beyond the remuneration discussion and should be on the main board agenda.”

The social impact of an organisation matters in talent attraction and retention – people increasingly care about the outcome of their work.

Is it most appropriate to talk about ESG at the board, the risk committee or the audit committee? Tea noted from her experience that: “This should be a responsibility at main board level. We need to make sure there is always an update on what we are doing and the strategy, plan and execution.”

How prepared is your organisation with all of the Environmental and Sustainability reporting and disclosure requirements?

Boris believes that: “ESG is a very good proxy for operational excellence. We try to do the right things, bring that to the DNA of the organisation and make it part of the service we provide to our customers.”

One barrier to a consistent understanding about organisations’ progress in reporting is that there have been various organisations involved.

Louis pointed out: “The TCFD [Task Force on Climate-Related Financial Disclosures] seems to be getting most of the momentum in terms of reporting requirements. Consistency is a key theme in terms of the common metrics that can create good comparisons and an understanding of how different organisations are coping.”

Has your Remuneration Committee started looking at ESG matters as part of its work programme and remuneration policy development?

There can be challenges associated with moving from a unilateral focus on profits to a more complex, inclusive and balanced perspective. Tea observed that: “In some businesses, we have announced KPIs in terms of climate, gender and ethnicity, and we have included those objectives in the performance requirements of executive directors.”

The remuneration discussion used to be around very objective criteria; but most of the value of an organisation can be intangible.

Boris concluded that: “Many policies within an HR department play towards having the right social inclusion. Those will never be strictly connected to the remuneration – but they are an integral part of achieving the outcome. It is a work in progress making that explicit and fully disclosable.”

A huge thank you to our brilliant panel:

Tea Colaianni

Founder and Chair at Diversity in Retail, Senior Independent Director & Chair of RemCo at Watches of Switzerland and NED & Chair of RemCo at DWF Group Plc

Tea has developed a portfolio of non-executive director roles. She is currently Senior Independent Non-executive Director on the Board of Watches of Switzerland Group plc, as well as NED at both multinational law firm, DWF Group plc and global payroll and HR service provider, SD Worx.

Previously, Tea was NED and Chair of the RemCo on the Boards of Bounty Brands, Mothercare plc and Poundland plc. She was also NED of the Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust.

Alongside her non-executive roles, Tea is Chair and Founder of the WiHTL campaign. A keen advocate of gender diversity, having been involved in a number of initiatives led by Women1st, The Prince’s Trust, the Aspire Foundation and IWF, Tea rallied support to conduct the first ever research into female leadership across the hospitality, travel and leisure sectors in 2018. She has since created an influential collaboration platform of leaders across the HTL sector, with the objective of increasing gender representation and diversity at leadership level across hospitality, travel and leisure.

Tea’s executive career spans different industries and countries. Her most recent executive role was Group HR Director at the FTSE 100 Merlin Entertainments plc. During her tenure, Tea was part of the leadership team that led the business through one of the most successful IPOs in 2013. She set and executed the strategic HR agenda in the business with a market cap of over £4 billion and over £1 billion in annual revenues, with over 27,000 employees in 23 countries, across four continents. The transformation of the HR function achieved industry-leading engagement scores that attracted several external awards.

 

Boris Huard

Boris Huard

Managing Director, EMEA at GBG Plc, NED and Remco Chair at Dotdigital Plc

‘Boris currently works as EMEA Managing Director for GBG Plc and is on the Board of Dotdigital Plc as a NED and Chair of remuneration committee, bringing present day experience of running software, big data and analytics businesses – topics of key importance to Dotdigital.

Boris has held roles in the technology industry for 20 years, ranging from divisional Managing Director at Logica, Board Director with Maxima Plc, Chief Executive at Sword CTSpace and UK&I Executive Board at Experian.

During those years, he delivered sustainable organic growth and executed bolt-on acquisitions. From turnaround to successful public to public exit transactions, Boris drove performance through hands-on P&L management, international business development, cross-continents operations, mergers and acquisitions and company integrations.

He leads under the motto ‘grow people to grow revenue’ and plays a key part in helping teams to reach their full potential. A proud Corsican, Boris is in his element on, or in, the sea’.

 

Louis Cooper

Chief Executive at NEDA (Non-Executive Directors Association)

Louis has a diverse and rich blend of experience and can demonstrate a successful track record of working with NEDs and boards leading international plcs, dynamic entrepreneurial companies, major charities and INGOs, public sector organisations and government departments. Louis has the practical skills and capabilities to help with training and education; placement and recruiting; mentoring and advising.

 

Louise Chaplin

Head of Board Practice at Eton Bridge Partners

Specialising in executive search within board level positions, Louise’s unique combination of expertise and experience enables her to work closely with both clients and candidates at a senior level to ensure the best possible outcomes. Louise supports Chairs and CEOs to attract the right talent for their boards. She has worked across a wide variety of business sectors, functions and geographies and has a broad and diverse client base.