Speaking Out

The widespread belief that CEOs are grossly overpaid is erroneous. In reality, most chief executives receive salaries commensurate to their performance while some are even underpaid. The Chief Executive magazine's sixth annual compensation survey of 229 firms showed that 59% of these organizations offer pay in proportion to performance. Only 17% reported paying high for low CEO performance. In view of the increasing charges of executive over-compensation, companies should be able to justify their compensation policies and practices to their shareholders, legislators and other self-appointed critics. Some measures that are worth considering are reviewing the compensation committee charter, documenting pay and performance, obtaining the approval of the board of major compensation decisions and seeking the assistance of compensation consultants.

Business
Business, general
Executive compensation
Compensation management
Methods