Executive Compensation Database
The executive can justify a higher remuneration if the executive can deliver above the minimum shareholder metrics, and vice a versa.
Looking at remuneration as an absolute number (e.g. the executive with the highest or lowest rem) is frought with danger if not assessed in a corporate performance context.
As an example:
Company X has earned for its shareholders a 10% ROI. On that basis, this ranks relatively low compared to other companies. The executive's rem is based on industry standards and is, in this example, $1m.
What bearing on the executive's rem are the following two scenarios:
A. When the executive took over, ROI was 15% and the executive has been responsible for an erosion of shareholder benefit. Is the executive still worth $1m?
B. When the executive took over, ROI was negative and the business was on the verge of insolvency. The executive saved the company and returned it to profit. Is the executive's rem worth more than industry standard?
Therefore executive 'worth' can only be assessed in context.
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