Our Executive Compensation Audit Work Program provides a framework for auditing and validating executive compensation processes to ensure compliance, transparency and alignment with organizational goals. It emphasizes the significance of executive compensation, which includes fixed salaries, performance-based bonuses, and benefits tailored to meet regulatory standards and business objectives. The tool highlights the risks associated with improper compensation practices, such as financial losses and reputational damage, and underscores the need for regular audits and documentation. It introduces the role of independent compensation committees in overseeing these processes and offers tools to assess procedures, validate payout calculations and mitigate risks. Additionally, it outlines the impact of external factors like market fluctuations, regulatory changes and enhanced SEC disclosure requirements on executive compensation practices.

This document features three audit work program samples and an auditing questionnaire to guide organizations through various aspects of executive compensation review. Sample 1 focuses on understanding the compensation process, committee structure and compliance mechanisms. Sample 2 emphasizes verifying committee approvals, member independence and adherence to reporting regulations. Sample 3 centers on assessing individual payouts under the Executive Annual Incentive Plan, ensuring accuracy and alignment with approved metrics. Complementing these samples, the auditing questionnaire provides critical insights into establishing effective plans, evaluating risks and addressing challenges in managing complex compensation structures. Together, these resources offer a customizable approach to maintaining robust executive compensation systems.

Audit steps include:

• Document an understanding of the executive compensation process.
• Verify that the charter is properly approved through the board of directors' meeting minutes.
• Obtain vendor credentials and verify that the vendor is skilled in valuing share-based compensation.
• Compare documented/approved metrics to those utilized in the calculation of payouts for the Annual Plans to ensure agreement.