Balancing Executive Compensation With Business Performance
As government regulators apply more scrutiny to executive compensation, corporate boards are spending more time reconciling increasing calls for pay-for-performance reforms with their need to motivate and retain chief executives and other senior management leaders.
On one hand, public company directors – in particular – must demonstrate reason, purpose and discretion when it comes to protecting the interests of shareholders, customers and employees. They are feeling increased pressure to show restraint and to reward longer-term corporate performance especially relating to the remuneration of the CEO.
After all, given a spate of high-profile media disclosures of stunning CEO pay, equity and severance packages, the last thing any director wants is to see the head of the board’s Compensation Committee taken to task by activist investors or The Wall Street Journal.
On the other, boards must make sense of how regulation and the need to remain competitive in the market for top management leadership provides them with the space they need to make effective judgments about incentives and rewards.
To say that executive compensation is keeping board directors, compensation consultants, executive search consultants and Human Resources leaders busy these days is indeed an understatement.
Clearly, the focus is on rewarding long-term business performance and applying the litmus test of reasonableness to CEO employment contracts and pay practices relating to his or her senior management team.
What remains unanswered is the extent to which government, shareholder and media interests will provide the margin required to attract, motivate, reward and retain top executives at a time when they have more career options than at any time in the past two-and-a-half years.
Note to Editors: About executive search firm TRANSEARCH International
Executive search firm TRANSEARCH International has representation in most of the major economic centres of the world with 59 offices in 37 countries. TRANSEARCH International was founded in 1982 and is a leading global executive search firm.
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