What’s the problem with CEO pay? – Australian Financial Review 4th Oct 2018
- October 25, 2018
- Jeremy de Constantin
- No comments
What’s the problem with CEO pay?
Far better to publish individual scorecards making visible to an investor the contribution of the individual. Easily done by calculating a percentage score of actual performance to an agreed target. And only metrics where the individual has a direct line of sight. A CEO should be responsible for performance to target for enterprise value. A sales manager, repeat sales and new business. A production manager, cycle time and error rates, etc.
If a CEO is meeting targets on EV, then what is the problem? Similarly, if a production manager is producing the goods on time and defect free, then reward him appropriately. If a sales manager is consistently growing revenues, again publish this and reward her.
Accountability along these lines will produce far superior business outcomes (for everyone at all levels) than will Labor’s veiled attempt to shame.