“Pay for Performance” Temporarily Slightly More Meaningful Than Usual


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?

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

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

Share your feedback: We’re planning to launch a new version of the comments section. Help us test it.