CONTINUED RISE IN PERFORMANCE-BASED EXECUTIVE COMPENSATION

Pay-for-performance-executive compensation has increased.

According to the 09 May 2011 Wall Street Journal, “Of the 350 companies in [The Wall Street Journal/Hay Group compensation] survey, 238 gave the CEO some form of performance-based award last year, up from 204 the prior year.”

As a result of the Dodd-Frank legislation, shareholders in public companies exert more influence on executive pay with increasing emphasis on applying performance metrics to executive compensation.  Because of more scrutiny and assertive critics, board of directors’ compensation committees are endeavoring to get executive compensation packages just right.  A  CEO just showing up to work and looking presidential will not impress prudent compensation committees. Any instinctive good will and generosity that compensation committee members may have toward a CEO will be overridden by their need to protect their own reputations as objective, clear-eyed stewards of the shareholders’ interests.

Commonsense should have dictated that executive pay for performance ought to have been commonplace all along.

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