Headers are good, but do not overdo it

Before

2008 Comparator Group

This year’s comparator group includes 18 companies, consisting of a mix of both direct competitors and similar-sized companies within the broader energy industry.

Each year the Compensation Committee reviews the comparator group to validate the list of comparator companies and make any changes if appropriate. The 2007 comparator group continued to be appropriate in terms of size and business for Acme’s executive officer pay comparisons in 2008. However, ABC Co. was acquired by XYZ Inc. in 2007 and, as a result, was no longer available for comparison going forward.

For 2009, the Compensation Committee approved a revised comparator group. The 2008 group consists of companies in the broader energy industry. The group used for 2009 pay decisions puts more focus on companies that work in the same industry segment and reflect where we compete for business and talent.

Objectives of our Comparator Group

To determine competitive total pay levels, we use our comparator group when we consider the amount and form of pay used by competitors as well as how competitors divide pay among the various forms. Through the use of publicly available financial measures, we review our comparator group to validate the design of our incentive plans and test the pay and performance relationship of our NEOs.

Size Reflects Company’s Business and Complexity

We consider a range of revenues, assets, and market capitalization when selecting companies for our comparator group. This results in compensation that is appropriately scaled and reflects comparable complexities in business operations.

Industry and Business Operations Similarities

In order to provide reasonable performance comparisons, our comparator group companies operate within the same industry and/or face similar business challenges and opportunities. Business consolidation and unique operating models today create some challenges in identifying comparator companies. As a result, we take a broader view of comparability to include organizations that are similar in some, but not all, respects.

Sufficient Number of Companies

Our comparator group contains a sufficient number of companies to facilitate valid comparisons. We target 15 to 25 companies as the number of companies to use in order to have a valid comparator group.

(351 words)

Before, with commentary

2008 Comparator Group [The word “comparator” is generally used in technical discussions. It isn’t wrong here, but seems more grandiose than necessary.]

This year’s comparator group includes 18 companies, consisting of a mix of both direct competitors and similar-sized companies within the broader energy industry.

Each year the Compensation Committee reviews the comparator group to validate the list of comparator companies and make any changes if appropriate. The 2007 comparator group continued to be appropriate in terms of size and business for Acme’s executive officer pay comparisons in 2008. However, ABC Co. was acquired by XYZ Inc. in 2007 and, as a result, was no longer available for comparison going forward.

For 2009, the Compensation Committee approved a revised comparator group. The 2008 group consists of companies in the broader energy industry. [This repeats language from the first paragraph.] The group used for 2009 pay decisions puts more focus on companies that work in the same industry segment and reflect where we compete for business and talent.

Objectives of our Comparator Group [This should be first. Explain what the peer group is before disclosing who is in it.]

To determine competitive total pay levels, we use our comparator group when we consider the amount and form of pay used by competitors as well as how competitors divide pay among the various forms. Through the use of publicly available financial measures, we review our comparator group to validate the design of our incentive plans and test the pay and performance relationship of our NEOs. [Again, the company is using technical language to make this process sound more scientific than it really is. (In a later paragraph that doesn’t appear in this sample, the company acknowledges that “setting pay is not an exact science.”)]

Size Reflects Company’s Business and Complexity

We consider a range of revenues, assets, and market capitalization when selecting companies for our comparator group. This results in compensation that is appropriately scaled and reflects comparable complexities in business operations. [This paragraph should be combined with the one that follows it. They aren’t sufficiently different to be separate.]

Industry and Business Operations Similarities

In order to provide reasonable performance comparisons, our comparator group companies operate within the same industry and/or face similar business challenges and opportunities. [This standard is different from what the company says above. The beginning of the sentence is redundant.] Business consolidation and unique operating models today create some challenges in identifying comparator companies. As a result, we take a broader view of comparability to include organizations that are similar in some, but not all, respects.

Sufficient Number of Companies [This section can easily be condensed and folded into another paragraph. It does not warrant a separate header.]

Our comparator group contains a sufficient number of companies to facilitate valid comparisons. We target 15 to 25 companies as the number of companies to use in order to have a valid comparator group.

After

2008 Peer Group

How We Use Our Peer Group

To determine competitive total pay levels, we look at publicly available data showing how much our peer group pays, as well as how that pay is divided among salary, bonus, equity, and other forms of compensation. Then we consider whether our proposed compensation packages and pay for performance policies are appropriate in comparison.

Composition of the Peer Group

This year’s peer group includes 18 companies, consisting of a mix of both direct competitors and similar-sized companies. We typically aim for a peer group of 15 to 25 companies so our comparisons will be valid.

Each year the Compensation Committee reviews the composition of the peer group to ensure it remains a suitable basis for comparison. In general, the 2007 peer group continued to be appropriate in terms of size and business for Acme’s executive officer pay comparisons in 2008. However, we removed ABC Co. from the group because it was acquired by XYZ Inc.

For 2009, the Compensation Committee revised the peer group to reflect a slightly different focus. The 2008 peer group comprises companies in the broader energy industry. In contrast, the group used for 2009 pay decisions comprises companies in the same industry segment in geographic locations where we compete for business and talent.

Characteristics of Peer Group Companies

Companies in our peer group have a range of revenues, assets, and market capitalization. Business consolidation and unique operating models today make it challenging to identify “ideal” peer companies. Accordingly, we take a broader view of comparability to include organizations that are similar in some, but not all, respects. The advantage of this approach is that the Compensation Committee can evaluate how compensation among our peer group is scaled to reflect differences and complexities in business operations.

(297 words)