This briefing explores how and why compensation committees are becoming much more engaged and vigilant, and shares leading-practice tools that corporations are using to design an effective compensation plan and to disclose their rationale. It's not easy being a compensation committee at this time. The media have exposed some embarrassing and excessive compensation arrangements, and shareholders are calling for better alignment between compensation and building shareholder value.

At the same time, real and significant forces are driving both executive and director compensation levels up. In light of these conflicting forces, compensation committees are embracing transparency as never before. The right compensation plan design will ultimately be successful or disastrous based on two issues: how the organization discloses compensation and the content of the design itself.