What companies do: pay for performance

Posted by Josephine Gartrell

Companies rely on CEOs to produce balanced growth and profitability while managing capital. Because annual and sustained performance are at the heart of shareholder interest, rigorous performance-pay programs, once only for the visionaries, are quickly becoming the norm. In fact, this “at-risk” pay often comprises up to 90 percent of a CEO’s compensation.

Hay Group recently completed the seventh year of its CEO pay study, in partnership with The Wall Street Journal. A key finding is the ongoing commitment by top companies to increase the performance-based component of total long term incentives (LTI).

What we found

A review of proxy filings confirms companies’ objective to elicit long-term commitments from executives through performance-pay programs. Stock options and performance awards have been the most prevalent LTI vehicles in the last five years, often used together as part of a company’s balanced LTI structure. Pe ...

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