Executive Compensation and Enterprise Risk

A key decision point when designing and managing executive compensation plans relates to performance metrics. How metrics are defined and calibrated can result in enterprise risk, especially if the measures are ambiguous or susceptible to manipulation.

The metrics utilized in incentive plans typically fall into a few broad categories:

  • Cash flow based metrics
  • Accrual accounting based metrics
  • Market based metrics

At Gallagher McDowall Associates, a key part of our work involves helping clients to identify and mitigate the potential risks that may be inherent in the design of their executive compensation plans.  We look at the types of measures, as well as how executives meet or achieve performance targets to define ways to reduce enterprise risk associated with executive compensation.

To find out more about how Gallagher McDowall Associates can help you with your Executive Compensation needs, please contact us.