CEO pay alignment to shareholder interests

Roger Martin pulls together a good analysis of what is taking place with a lot of CEOs at large public traded companies.

At a distance one might think tying a CEO’s compensation to the company’s stock performance is a good thing. But based on how it plays out, timing has more to do with the amount of gain than year over year performance.

I think CEOs deserve a high compensation and they should be rewarded when their company succeeds. Lots of employees and shareholders are counting on their leadership. But somehow we have to put an end to CEOs who get big paydays just becuase the timing was right or the market rebounded and took their stock along for the ride.

Amplify’d from

The Nasty Truth about CEO Pay

Every spring, the Wall Street Journal publishes a CEO Salary Report, using a Hay Group survey to break down compensation levels for the CEOs of the 350 biggest publicly traded US companies. Every year, there is predictable outrage at the sheer size of the numbers, especially relative to the average worker. This year was no exception, though the criticism had a particular post-crisis bent: Why are CEOs making an average $9.3 million, up 11% over 2009, when the economy is still largely in the tank?

The answer — also predictably — is stock-based compensation. The compensation winner, Viacom’s Philippe Dauman, was up 150% to $84 million — with 66% coming from an even split of stock options and restricted stock. Number two was a familiar face, Larry Ellison, with $69 million, 90% of it from Oracle stock options.

  1. youtim posted this