Before the compensation review goes to the compensation committee, war-game the packet. Check that the merit, promotion, and equity numbers agree with the operating plan and the equity reserve, find the people the averages hide, and prepare for how the outcome reads to directors and to employees. Paste the packet, the plan's payroll budget, manager recommendations, the equity reserve and hiring plan, market data, and the list of critical retention risks into one request, with names removed. Instruct Pingpong to reconcile the totals, flag compression and refresh gaps, and list the questions the committee will ask. Review your written answers in a second round.
HR and counsel own pay equity analysis, employment law, and the terms of the equity plan. Pingpong reviews the packet's consistency and readiness. It does not give legal or tax advice.
This page is for chief executives, finance and people leaders, and directors preparing an annual or mid-year compensation review. Executive starting points live under Pingpong for executives.
Make the numbers agree
Three totals should match: the merit pool in the packet, the payroll increase in the operating plan, and the sum of what managers recommended. On equity, the refresh pool plus new hire grants for the year should fit inside the remaining reserve. When they do not match, the committee will find it.
Find the people the averages hide
- Compression: recent hires at market rates earning more than longer-tenured peers at the same level.
- Refresh gaps: people the executive team calls critical whose unvested equity is running low, but who miss the eligibility rule.
- Promotion realism: the number of nominations compared with the promotion budget.
- Executive increases: how the leadership team's raises compare with the company's.
Questions the committee will ask
- How does the total compare with the plan, and with last year?
- Who is most likely to leave, and what does this review do about it?
- How much equity reserve remains after this cycle and the hiring plan?
- When was pay equity last reviewed, and by whom?
A worked example
This example is illustrative and does not describe a customer. A 450-person software company with $50 million in base payroll prepares its annual review. The operating plan budgets a 4% merit pool, or $2 million.
The chief people officer pastes the packet, the plan, the sum of manager recommendations, the equity reserve and hiring plan, market data by level, and the executive team's list of 40 critical retention risks, with names removed.
A useful pass finds that manager recommendations add up to 5.1%, about $550,000 over plan. The promotion budget assumes 6% of employees are promoted, while managers nominated 14%. The equity refresh would use 1.2% of fully diluted shares, with 1.5% left in the reserve for the year. That leaves 0.3% for 60 planned hires, who on past grants would need about 0.8%. Engineers hired in the past year earn about 9% more than tenured engineers at the same level, and merit increases alone will not close the gap. Refresh eligibility depends only on the top performance rating, so 9 of the 22 critical people with less than a quarter of their original grant unvested are excluded. The leadership team's average increase is 6% against 4% for the company. The packet does not mention pay equity, and no analysis was run this cycle.
The revised packet holds merit at 4% after managers recalibrate. A separate 0.5% market adjustment addresses compression at the affected engineering levels. Calibration brings promotions to 8%. Refresh eligibility adds a retention criterion, and the pool falls to 0.9%, leaving 0.6% for hiring. The packet asks the committee how to cover the remaining gap, with counsel advising on the plan's terms. Executive increases match the company average unless market data supports more, and any exception is shown on its own line. HR and counsel complete a pay equity analysis before the packet goes to the committee. The chief people officer drafts manager talking points that explain the market adjustment.
When the equity reserve depends on next year's hiring, see war-game a hiring plan before the board approves it.
A request you can copy
Below are our compensation review packet, the plan's payroll budget, manager recommendations, the equity reserve and hiring plan, market data, and our critical retention list, with names removed. Reconcile the merit, promotion, and equity totals with the plan and the reserve. Flag compression, retention risks excluded by the eligibility rules, and executive increases that differ from the company's. List the questions the compensation committee will ask. Mark questions for HR and counsel. Do not give legal or tax advice. Stop there so we can answer in writing, then review our answers.
How Pingpong runs the review
The web review app sends your request through several models in order. Each later model receives the original request and every earlier answer, with instructions to assess the work so far. For the steps inside the app, see running your first review.
What a model can't review
A model does not know individual circumstances, local pay rules, or how employees will react. HR and counsel own pay equity and plan terms, and the committee and board own approval.
When the review goes to the board, see war-game a decision before the board meeting. More guides live under work decisions before you commit.