|
|
Article: Setting executive pay in the 'hard spot'; The big challenge: when financial performance is strong but the stock price has not yet responded to reward shareholders. What should the compensation committee do in this scenario?(EXECUTIVE COMPENSATION)
- Article from:
- Directors & Boards
- Article date:
- January 1, 2008
- Author:
CopyrightCOPYRIGHT 2008 Directors and Boards. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
|
BEYOND THE SWEEPING MYTHOLOGY that now surrounds executive compensation, the reality is that boards at the vast majority of U.S. companies appropriately reward CEOs who perform well and punish those who do not with comparatively lower compensation or termination. Our extensive research, conducted over two decades, shows that this performance-driven approach to executive pay has played a major role in the success of the U.S. corporate model, which has generated enormous wealth for shareholders, millions of jobs, and exceptional economic growth.
Despite empirical support for the effectiveness of the pay-for-performance model, some shareholders and executive pay ...