The Family Business Board Role in Executive Compensation Planning: An Illustrative Case

In brief: Originally appearing in The Family Business Board Volume 2: Governance for Agility and Growth, this case study shows how a family business board can use a committee of independent directors and an outside consultant to resolve a family conflict over executive compensation.

This resource can help your board to

• Set executive compensation at a family business

• Resolve conflicts between family members at a family business

• Hire independent consultants to develop an executive compensation philosophy

Most relevant audiences: directors on family business boards

This case shows how one board used a committee of independent directors and a consultant to resolve family conflict over executive compensation.

Situation

• Family-owned $300 million manufacturing company

• Two family members (brothers) were senior executives (CEO and COO) of the company and also board members.

• Two family members (brothers—and cousins of the two senior executives) were on the board of Directors but not actively involved in management of the company.

• Several other family members (cousins) held minority interests in the company but did not sit on the board.