Executive and board compensation consulting
A market benchmark can make a pay decision look defensible while leaving the important choice unanswered.
Before selecting a percentile or changing incentives, establish what the organization needs to recruit, retain and reward—and what it can sustain. Arcus helps boards and executive teams compare compensation options, examine role scope and market evidence, and develop a practical decision and implementation plan.
The decision before the program
01 / Are you solving a market-pay gap, a role-design problem or a succession risk?
02 / Which organizations genuinely compete for the talent this role requires?
03 / What commitment can the organization sustain under less favourable conditions?
Use the market comparison to inform a policy choice
An illustrative organization is struggling to recruit an executive. One explanation is that compensation is below the relevant market. Another is that the role combines responsibilities few candidates can credibly deliver. A third is that decision authority, location, board relationships or the organization’s prospects make the opportunity unattractive. Raising the salary could help with the first explanation while leaving the others unresolved.
Arcus’s central proposition is that compensation design should connect the role, the relevant talent market, the desired contribution and the organization’s capacity to pay. Benchmarking is essential evidence when a market comparison is needed; a percentile is not a complete remuneration policy. The board still needs to explain why the chosen position fits its circumstances.
Start with the decision rather than a request for a salary number. Is the organization replacing a CEO, reviewing a board retainer, redesigning an incentive plan or resolving inconsistencies across leadership roles? These questions require different comparators, evidence and approval processes.
Four explanations for compensation pressure
Use these competing diagnoses before assuming that a broad increase is the appropriate response.
01 / A genuine market mismatch
Look for comparable recruitment outcomes, credible offer evidence, relevant survey coverage and differences in total compensation. A small or outdated sample should not support a precise claim that a role is underpaid by a particular percentage.
02 / A role or accountability mismatch
Compare the actual mandate, decision authority, organizational scale and complexity with the job description. A title can conceal a materially broader or narrower role than its apparent peers. Reassess the role before pricing an unsuitable match.
03 / An incentive-design problem
Employees may understand the reward but see little connection between their decisions and the outcome. Alternatively, a measure may reward volume or cost while allowing quality or risk to deteriorate. Test the behavioural mechanism as well as the payout opportunity.
04 / A continuity or succession problem
Dependence on one executive can create pressure for an exceptional retention payment. Examine the reason for that dependence, available successors and the transition required. A payment may buy time; it does not itself create organizational resilience.
What recent evidence adds to the benchmarking debate
A 2026 Journal of Finance study, “Why Have CEO Pay Levels Become Less Diverse?” examines publicly listed US firms over 1996–2023. It reports declining dispersion in CEO pay and evidence consistent with growing benchmarking to industry peers close in size contributing to pay clusters. The authors identify institutional influences on that practice. The finding concerns convergence, not a universal conclusion that benchmarking inflates pay. It does not establish the appropriate salary for a Canadian nonprofit, public organization or private company.
The G20/OECD Principles of Corporate Governance 2023, V.D.5 connect remuneration policy with long-term interests, performance criteria established in advance and board monitoring. They also emphasize the alignment of incentives with strategy and risk management. These are governance principles, not a compensation survey or a statement of every Canadian organization’s legal obligations.
Arcus’s synthesis is that comparability and organizational fit must be examined together. Standardized peers can improve consistency and limit arbitrary selection, yet a board should still explain a material difference in mandate or talent requirements. A bespoke comparator group can improve relevance, yet also create room for selective inclusion. Neither approach removes the need for independent judgement.
The Arcus compensation decision test
This original diagnostic creates a practical chain from evidence to recommendation. It is not a validated compensation formula.
01 / Role — What is being priced?
Define the mandate, scope, required expertise, decision rights and accountability. Separate the value of the position from the assessment of the individual. Record any temporary responsibilities rather than silently pricing them as permanent.
02 / Market — What is genuinely comparable?
Set inclusion and exclusion criteria before reviewing pay outcomes. Examine sector, scale, complexity, geography and talent mobility. Distinguish total direct compensation from base salary, and identify benefit, pension and incentive differences.
03 / Consequence — What will the design encourage?
Test the proposed package against delivery, quality, risk and collaboration. Ask who can influence each measure and what happens when results improve for reasons outside management’s contribution. Examine the conditions for judgement before the award is assessed.
04 / Commitment — What can be sustained?
Model fixed and variable cost under plausible scenarios, including transition and administration. Identify approval requirements, implications for related roles and the basis for communicating the decision. Agree when the policy will be reviewed.
Make comparator selection visible
Consider two illustrative peer groups for the same executive role. One contains organizations of similar revenue; another contains employers recruiting for comparable regulatory, operational and leadership responsibilities. If the recommendations differ, selecting the more convenient median does not resolve the issue. Identify why the role sits differently in the two comparisons and which market the organization actually needs to recruit from.
Review the age and coverage of data, the number of usable matches and the definition of each compensation component. A reported midpoint can be misleading if some observations include substantial variable compensation and others report base pay alone. Where evidence is thin, present a range and a confidence limitation rather than claiming unsupported precision.
An internal role assessment and an external market review answer related but different questions. Internal evaluation examines relative responsibilities; external evidence examines compensation practices in a defined market. Reconcile a conflict explicitly. Do not treat a point-factor score as automatic proof of market competitiveness, affordability or legal compliance.
Compare practical policy alternatives
Each option should be tested against the diagnosed problem and the organization’s operating conditions.
Maintain the structure and improve the evidence
Appropriate when the policy remains suitable but comparisons or role records are weak. It avoids unnecessary disruption. Its risk is delay where a well-supported recruitment problem requires an immediate, bounded response.
Adjust base pay for a defined role or group
Can address an evidenced market or scope mismatch. It creates a recurring commitment and may affect internal relativities and benefit costs. Specify the basis of the change and review implications for adjacent roles.
Redesign variable compensation
Can reinforce selected priorities where outcomes and contribution can be assessed credibly. It requires usable data, safeguards and decision rules. Complexity can create disputes and administration without improving alignment.
Change the role or succession arrangement
Can address an unsustainable mandate or key-person dependency. It may reduce the need for a broad permanent pay change, but requires transition capacity, authority and a realistic talent plan. The operational cost may exceed the immediate compensation saving.
Treat board remuneration as a distinct design question
Executive pay supports the recruitment and contribution of people responsible for managing the organization. Board remuneration concerns a different mandate: oversight, judgement, preparation and governance responsibility. Do not transplant an executive incentive structure into a director package simply because both involve senior leadership.
Examine the time and complexity of the board’s work, chair and committee responsibilities, the organization’s circumstances and the expectations attached to the role. Identify whether an exceptional workload is temporary or part of an enduring change. A permanent retainer increase and a defined temporary arrangement create different commitments and precedents.
The client should confirm its authority to remunerate directors and the applicable approval, disclosure, conflict and independence requirements with its appropriate advisers. Arcus can support the management analysis and options; this service page does not prescribe a legal structure or promise compliance across jurisdictions.
Test affordability beyond the first-year increase
Model the proposed change over a relevant planning period. Examine base pay, variable awards, benefits, pensions where applicable, transition costs and the effort needed to administer the plan. Consider related-role adjustments rather than isolating a single executive package. Show the assumptions clearly and avoid presenting maximum variable awards as either guaranteed cost or costless optionality.
Test a weaker funding or demand scenario and an unusually strong outcome. Could a formula produce a payout the board would struggle to justify? Would fixed commitments force a service trade-off the organization has not acknowledged? Decide how these cases will be handled before making commitments.
Implementation also has a credibility cost. A technically market-aligned package may be difficult to explain if the rationale ignores workforce conditions or the organization’s purpose. Communication should describe the decision criteria and process without disclosing confidential personal information or promising a result the organization cannot support.
How Arcus can help turn the review into a decision
An engagement can focus on one executive role, board remuneration or a defined group of leadership positions.
01 / Frame the mandate
Deliver a decision brief, role-scope assessment and evidence plan. Clarify the policy question, approvals, information access and boundaries with the client’s HR, finance and governance leads.
02 / Build and test the comparison
Prepare comparator criteria, an appropriately scoped market review, component definitions and evidence limitations. Challenge inconsistent matches and distinguish survey observations from consultant judgement.
03 / Compare options and costs
Develop a policy-options paper, scenario model, incentive-design considerations and implementation implications. Document trade-offs rather than presenting a single percentile as the only defensible choice.
04 / Support approval and implementation
Prepare a recommendation for the authorized decision-maker, communication principles, responsibilities and a review schedule. Coordinate specialist input where legal, pension, tax or other requirements need separate confirmation.
Connect compensation with the wider organization
Arcus’s existing service offering includes job evaluation, market reviews, compensation planning and board advisory work. The scope, data sources and benchmark availability should be confirmed for the proposed engagement; a particular evaluation method does not by itself establish compliance.
Explore related Job Evaluations, Executive and Staff Performance Evaluations and Board Performance Evaluations. These services address different questions that may need to be resolved together. Use the central consultant directory to explore relevant expertise.
Discuss the compensation choice your board needs to make
Tell Arcus whether the immediate issue is recruitment, retention, role scope, board workload or incentive design; which positions are involved; and when a decision is required. We can discuss the evidence available, the appropriate review scope and the deliverables needed for a practical recommendation.