Executive Compensation

Philosophy and Objectives of Our Executive Compensation Program

The philosophy underlying our executive compensation program is to provide an attractive, flexible and market-based total compensation program tied to performance and aligned with the interests of our shareholders. Our objective is to recruit and retain the caliber of executive officers and other key employees necessary to deliver sustained high performance to our shareholders, customers, and communities where we have a strong presence. Our executive compensation program is an important component of these overall human resources policies. Equally important, we view compensation practices as a means for communicating our goals and standards of conduct and performance and for motivating and rewarding employees in relation to their achievements. 

Overall, the same principles that govern the compensation of all our salaried employees apply to the compensation of our executive officers. Within this framework, we observe the following principles:

• Retain and hire top-caliber executives: Executive officers should have base salaries and employee benefits that are market competitive and that permit us to hire and retain high-caliber individuals at all levels;
• Pay for performance: A significant portion of the annual compensation of our executive officers should vary with annual business performance and each individual’s contribution to that performance;
• Reward long-term growth and profitability: Executive officers should be rewarded for achieving long-term results, and such rewards should be aligned with the interests of our shareholders;
• Tie compensation to performance of our core business: A significant portion of our executive officers’ compensation should be tied to measures of performance of our Financial Services Businesses;
• Align compensation with shareholder interests: The interests of our executive officers should be linked with those of our shareholders through the risks and rewards of the ownership of our Common Stock;
• Provide limited perquisites: Perquisites for our executive officers should be minimized and limited to items that serve a reasonable business purpose; and
• Reinforce succession planning process: The overall compensation program for our executive officers should reinforce our robust succession planning process.

 

2012 INCENTIVE PROGRAMS

To ensure a solid link between our incentive compensation awards and our short-term and longer term objectives, we use two specific programs: our Annual Incentive Program and our Long-Term Incentive Program..

• Annual Incentive Program. The Annual Incentive Program is designed to reward strong financial and operational performance that furthers our short-term strategic objectives. Financial performance is determined based on EPS achievement relative to the Company’s externally disclosed EPS targets.
  
• Long-Term Incentive Program. Our Long-Term Incentive Program consists of three parts that incentivize long-term value creation: stock options that reward increases in the market value of our Common Stock; performance shares and units that reward the achievement of our long-term ROE goals and increases in the market value of our Common Stock; and book value units that reward increases in book value per share.

*Source: Prudential Financial, Inc. 2013 Proxy Statement

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