Scala: The independent Compensation Sub-Committee sets the organisation’s compensation policy

( Tuesday 24 June 2014

Domenico Scala, Chairman of the FIFA Audit and Compliance Committee and part of the organisation’s three-man Compensation Sub-Committee, gave an interview to discuss FIFA’s salaries and compensation.

Mr Scala, there has been much discussion of FIFA’s salaries and compensation in recent days. You are part of the Compensation Sub-Committee. Can you explain exactly what this work entails?
An independent Compensation Sub-Committee was set up alongside the Ethics Commission and the Audit and Compliance Commission as part of FIFA’s Governance Reforms. This committee is responsible for setting the organisation’s compensation policy, approving items such as variable compensation based on contractually agreed targets and defining other principles such as expense allowances. The committee meets whenever necessary, but at least twice a year.

How were the committee’s members selected?

In accordance with FIFA’s Organisation Regulations, the chairs of the Audit and Compliance Commission and the Finance Committee form part of the Compensation Sub-Committee, and they jointly appoint another independent member. In our case, that member is Jean-Pierre Pedrazzini, an experienced partner with a renowned executive search firm.

Which criteria does the Compensation Sub-Committee use when determining salaries and compensation?

The criteria take into account the responsibility of the role, the complexity of the task and any necessary expertise the employee must bring to the role. Similar roles in other companies are also used for comparison, although this is not very easy as it is naturally difficult to compare FIFA with other companies. Despite this, it is possible to use specific criteria to establish various comparison groups and use this as a basis for remuneration. This compensation also needs to be competitive in order to attract strong candidates, given that FIFA is also competing for qualified staff.

What kind of scope and influence does the Compensation Sub-Committee have?

In principle, the committee is free to define and implement a new compensation policy, for example. Realistically, though, we must also ensure that employment agreements are in place, and these agreements can only be amended at short notice with the consent of the employee concerned. Having said that, there are times when we can exert influence. For example, when it comes to compensating the Executive Committee, we can take advantage of our scope immediately, as the Executive Committee members are compensated as elected representatives – similar to those of a supervisory board – and not on the basis of an employment agreement. In this case, the past practice of distributing bonuses has been abolished, because a supervisory body such as the Executive Committee is not directly tasked with managing the organisation, and as such has no contractually defined targets on which to base bonus payments. In addition to abolishing bonuses, the Executive Committee’s fixed compensation has also been adjusted in the past year. The last adjustment was made a year ago based on comparable compensation for the supervisory boards of other major companies. As a result, the total compensation for this group fell slightly overall.

If the reported compensation amounts paid to FIFA Executive Committee members are correct, do you believe they are appropriate? As the former CEO of a company, how do you rate these figures compared with conventional expense allowances in the free market?

FIFA publishes the total compensation paid to its management in its Financial Report, but as long as no further details are published there will continue to be speculation about how these figures break down. That said, I cannot comprehend the figures reported recently. FIFA is comparable with major companies in many respects, and as such, its management is remunerated in accordance with the same principles applied in the private sector. For example, I am not in favour of having people work voluntarily and just remunerating expenses, as that poses entirely different risks. Other than that, the Executive Committee compensation figures reported were lower than those of a typical board of directors and therefore completely reasonable in my view.