Compensation Committee
A board subcommittee of independent directors that sets and oversees executive compensation.
What is Compensation Committee?
The compensation committee is a subcommittee of a company's board of directors composed entirely of independent directors, responsible for overseeing executive compensation. Its duties include setting base salaries, approving annual cash bonuses, granting equity awards, reviewing incentive plan design, and evaluating whether pay is aligned with company performance and shareholder interests. The committee typically engages independent compensation consultants and prepares the Compensation Discussion & Analysis (CD&A) section of the annual proxy statement. NYSE and Nasdaq listing standards require all listed companies to maintain a compensation committee composed entirely of independent directors.
Example
Apple's Compensation Committee approved a FY2023 total pay package of approximately $63 million for CEO Tim Cook, including a base salary of $3 million and performance-based restricted stock units tied to Apple's relative total shareholder return versus S&P 500 peers over a three-year period.