“Pay for Performance” Temporarily Slightly More Meaningful Than Usual

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


The Wall Street Journal reports that, at least for the moment, companies with performance goals for their CEOs are actually paying their CEOs based on whether they meet those goals:

Preliminary results highlight how corporate directors, under new scrutiny from shareholders, are tying more CEO pay to corporate performance. When companies miss targets, directors are holding the line.

“The pressure from shareholders clearly has had an effect here,” discouraging boards from using their discretion to boost pay, says Robin Ferracone, executive chair of Farient Advisors LLC, a Pasadena, Calif., compensation consultant.

….That is a shift from a few years ago, compensation consultants say, when directors would often overlook missed targets and award big bonuses anyway. That dynamic has changed under pressure from investors and the Securities and Exchange Commission.

One of the worst aspects of “pay for performance” CEO compensation is that quite often it’s rigged outrageously in favor of the CEO. There’s almost no way to lose. And then, on the off chance that you do poorly anyway, the board decides that it was just bad luck and you shouldn’t be deprived of the bonus you’ve been counting on all year. So they make it up to you. After all, we’re all one big happy family on mahogany row, right?

But if the Journal is to be believed, company boards are actually holding their rock-jawed titans of capitalism to their promises these days. Good to hear. I wonder how long it will last?

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate