As previously noted, decisions with respect to compensation for executive officers, including our chief executive officer, are made by the compensation committee of our Board. The following discussion and analysis are focused primarily on the compensation for our executive officers during 2017, with additional detail provided for our NEOs.
Pay for Performance Philosophy
We are committed to providing value to our stockholders. We believe that our executive compensation program fairly and appropriately compensates our executive officers. The core principle of our executive compensation philosophy is to pay for performance in ways that we believe will motivate our executives to develop and execute strategies that deliver performance improvements over the short and long term. Accordingly, our executive compensation program is heavily weighted toward “at-risk” performance-based compensation. We have three principal elements of total direct compensation: base salary, annual incentive compensation and long-term incentive compensation. These elements provide our compensation committee with a platform to reinforce our pay-for-performance philosophy while addressing our business needs and goals with appropriate flexibility.
Our compensation strategy is to ensure progress towards the successful attainment of our vision, values and business objectives by aligning the interests of our executive officers with stockholder interests. The primary goals of our compensation program are to attract and retain the talent we need to successfully manage the Company, reward exceptional organizational and individual performance improvements, and accomplish these objectives at a reasonable total cost in relation to performance and market conditions.
The following compensation objectives are considered in setting the compensation components for our executive officers:
Attracting and retaining key executives responsible not only for our continued growth and profitability, but also for ensuring proper corporate governance and carrying out the goals and plans of Key;
Motivating management to enhance long-term stockholder value by aligning our executives’ interests with those of our stockholders;
Paying for performance by linking a substantial portion of management’s compensation to measurable performance, including specific financial and operating goals;
Evaluating and rating performance relative to the existing market conditions during the measurement period; and
Setting compensation and incentive levels that reflect competitive market practices.
We want our executives to be motivated to achieve Key's short-term and long-term goals, without sacrificing our financial and corporate integrity in trying to achieve those goals. While an executive’s overall compensation should be strongly influenced by the achievement of specific financial targets, we believe that an executive must be provided a degree of financial certainty and stability in his or her compensation. The design and operation of the compensation arrangements provide the executives with incentives to engage in business activities that support the value of Key and its stockholders.
Elements of Compensation
The principal components of our executive compensation program are base salary, cash incentive bonuses and long-term incentive awards in the form of equity, including performance-based equity. We blend these elements in order to formulate compensation packages that provide competitive pay, reward the achievement of financial, operational and strategic objectives on a short-term and long-term basis, and align the interests of our executive officers with those of our stockholders. We strive to hire and retain talented people who are compatible with our corporate culture and committed to our core values and who want to make a contribution to our mission.