Community Corner

Should Compensation Committees Take on the Responsibility of Human Capital Management?

Letters, we get letters, . . . Actual we get emails (and the occasional phone call), but we got a number of them asking for more information on the matter of whether compensation committees should explicitly take on the responsibility of human capital management after our blog last week listing four items that committees should consider addressing this year. On the question of whether committees should take on the responsibility of human capital management, readers’ (admittedly, a self-selecting group) responses fell into two categories, which may be summarized as follows:

  • Yes, compensation committees should explicitly take on the responsibility of human capital management, and

  • I don’t know Mike. You are the expert. You tell us.

Without even going into the arguments in favor of adding this responsibility, in light of current developments, I believe it is prudent for compensation committees to seriously consider adding to their duties the responsibility for human capital management (HCM). The reasons are simple. First, some significant investors and investor organizations want to see companies pay more attention to the issue. Second, the SEC soon may require companies to provide additional disclosures on it and the compensation committee seems like the logical home for the consideration of these issues.

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