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Long-term incentives for executives have evolved into effectively mid-term incentives, reducing the overall focus of executives on the long-term success of companies, compensation specialists said May 19 at WorldatWork’s 2015 Total Rewards Conference in Minneapolis. When it comes to executive pay, compensation professionals should forget about the norm and instead focus on what is best for the company’s overall strategy.
Businesses tend to keep to the middle of what is considered acceptable by constructing executive pay packages that are similar to others for fear of criticism from shareholders, said David N. Swinford, President and Chief Executive Officer of Pearl Meyer & Partners. Sticking to a traditional executive pay plan may not be best for every company and could hinder success, Swinford said. Instead, companies should ‘‘dare to be different’’ and examine what is critical for the business, what type of person they need to succeed and how to pay that executive, Swinford added.