Thursday, October 11, 2012
CEOs who get pay raises in good times and bad set themselves up for poor PR. Take these cases. There may be justifiable reasons for why these CEOs were paid bonuses in down years but the public won't accept them. To the average man, it looks like greed, and there is no explanation that can suffice. CEOs and boards too often forget that perception becomes reality. Boards, especially, shouldn't be giving CEOs a pass when bad luck strikes. Risk is a fact of living. To insulate CEOs from the unforeseen by ensuring their pay creates a bubble in which CEOs can forget the consequences of their decisions. Moreover, it creates a bad feeling in the ranks, especially if employees see their pay kept down. Compensation is a volatile issue at every level of an organization. Because of that, boards need to be especially careful in how they treat it.