When I put out the call for articles about performance management, several authors responded with opinions about how best to manage employees. But so far, no one has said anything about executive performance and pay.
But what about it? How do you measure executive performance, particularly that of CEOs? Today, The New York Times editorializes (Bankers and Their Salaries) about CEO compensation in light of the economic crisis. The Times editorial board rightly, in my opinion, argues that when the government bails out financial institutions, those huge salaries and severance packages should not be part of the deal. A CEO should not be rewarded for having steered the ship into the ground.
I think The New York Times doesn’t go far enough. What about other businesses? Why is it that when the embattled Home Depot CEO was pushed out, he went with a huge package? “Hey, we hate how you treated shareholders and managed the company. Here, take this huge wad of dough and get out of here.”
Why are the top leaders walking away from broken businesses with millions, tens of millions and hundreds of millions?
If we’re tying performance to compensation, then doesn’t it make sense to say that if you can’t run the business, you don’t get compensated?