1 / 7

The Coming Battle over Executive Pay

Explore the battle over executive pay, shareholder influence, and ethical compensation practices in the business world. Discover the challenges faced by companies in aligning executive pay with performance and societal expectations. Delve into the impact of the economic crisis on executive pay decisions and the need for a reevaluation of compensation structures. Learn about the British model, shareholder involvement, and potential solutions to the ongoing debate.

kirby
Download Presentation

The Coming Battle over Executive Pay

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Coming Battle over Executive Pay By: Karen Dillon Harvard Business Review September 2009

  2. GE CEO refused performance-based bonus • The forfeit of this pay is not what bothers the CEO, but shareholders determining pay • If Shareholders get a say in pay, what else will they want a say in • Working conditions? • Carbon footprint?

  3. Where did things go wrong • Outrage is not new • Economic crisis makes outrage stronger • CEO should not make more than 20% of average salary, but they earn up to 300% • Companies find loopholes on the taxes in the bonuses • List goes on and on…a lot to fuel the fire

  4. British Model • Shareholders have opinion but not binding • Until 2009 there were not a lot of active shareholders when it came to pay topics • True power lies within the independent advisory firms that make recommendations to shareholders • SHELL shareholders voted against a 1.9million dollar bonus for CEO because of recommendation

  5. What’s The Answer? • Era of stock options and preset bonuses is over, but no one agrees on what should come next • Only a few top executives have taken pay cuts or declined bonuses • In general, business leaders have been reluctant to participate in the discussion and have tried to keep their heads low • These companies need to take a stand and decide what is at stake and what they need to do about it

  6. Is Any Company Already on Track? • One company has linked performance-based compensation for executives to economic value added • No one receives a bonus based on individual performance • Separate long-term incentive program granting shares and options on basis of position and individual performance

  7. The Long View • There are hopes that this issue will blow over when the economy turns around • Compensation is a small portion of what should be worried about in the scheme of things • Need to worry more about the people below top level and keeping them motivated

More Related