There are few topics in governance that are more contentious than CEO pay, but tying pay to long-term growth may be one of the best options to quell the controversy.
An easy place for the compensation committee to start, advises Irv Becker, Vice Chairman of Korn Ferry's Executive Pay & Governance business, is to align executive pay with the long-term growth of the organization. "It's easier for them to rationalize that and easier for shareholders to understand that. If at the end of the day, companies grow over the long term that incentive will pay off for the CEOs."
A Korn Ferry study of 300 to corporations found that overall salaries and bonuses were barely moving in either direction, but but long-term compensation numbers were up significantly, notes Becker.
He discussed long-term growth and CEO pay, and other compenstation topics, research and trends in a recent video interview with David Shaw, Editor of Directors & Boards.
The video is part of Directors & Boards Governance Conversation series.
You can view the video below: