The NASPP Blog

Our popular “Meet the Speaker” series, featuring interviews with speakers at the 25th Annual NASPP Conference, is a great way to get to know our many distinguished speakers and find out a little more about their sessions in advance of the Conference.

For today’s “Meet the Speaker” interview, we feature an interview with Steve Kline of Willis Towers Watson, who will lead the session “Selecting Effective Measures and Goal-Setting Within Incentive Plans.”  Here is what Steve had to say:

NASPP: Why is goal setting important for incentive plans?

Steve: Say-on-pay has been with us for several years now. The primary benefit of this environment is that most of the problematic executive compensation practices that concern investors have been cleaned up. As a result, effectively aligning pay and performance is the number one issue in executive compensation. What’s more, one is never finished solving this riddle, as business conditions present new and different challenges each year.

Arguably, the heightened sensitivity due to say-on-pay has tilted the scale toward investors. So companies must remain vigilant in setting their incentive plan goals and payouts so that they provide meaningful motivation and reward for participants while aligning pay with performance over the long-term.

NASPP: What is a common mistake companies make with their incentive plans?

Steve: Assuming that the incentive plan design process is substantially complete when the ink is dry on the financial budget. Not all measures warrant a +/-20% range around the target, and 50% – 200% payouts may not always make sense. Compensation and HR professionals can add more insight into how threshold and max goals and corresponding payouts should be calibrated in order to optimize the pay package.

NASPP: What is the most innovative approach you’ve seen to goal setting?

Steve: I daresay the predictive performance model (PPM) that my colleagues at Willis Towers Watson and I have developed. Whereas much of the analysis around pay and performance has been tantamount to looking through the rearview mirror, our predictive analytics look out the front windshield to provide insight into probable future performance, which helps us understand likely incentive payouts. And when you stack all the incentive plans up, you can gain insight into the overall profile of the pay package, which helps in managing weightings on measures and tinkering with leverage as well as goals and target payouts.

NASPP: What is your favorite memory from a past NASPP Conference?

Steve: My most vivid memory of a prior NASPP conference is the opening of the October 2001 conference in New Orleans. Webb Bassick was the keynote speaker to begin the conference. It was just weeks removed from 9/11, and for most of the 1000+ in attendance, it was the first plane trip since then. It was a remarkable show of perseverance, as we, and the nation at large, went back to work, but forever changed.

Don’t miss Steve’s session, “Selecting Effective Measures and Goal-Setting Within Incentive Plans,” at the NASPP Conference!

The 25th Annual NASPP Conference will be held from October 17-20 in Washington DC. This year’s program features close to 100 sessions on today’s most timely topics in stock and executive compensation; check out the full agenda and register today!