Posts Tagged ‘Board of Directors’

Executive Comp Programs Shouldn’t Make You Blush

November 30, 2009 Charlie Judy Leave a comment

The Wall Street Journal had a great article this morning entitled “No More Executive Bonuses.”  The author’s argument is that “the problem isn’t that they are poorly designed.  The problem is that they exist.”  Now I’m an “executive” in my company – you can read about what my bonus plan is by picking up a 10-K.  I can assure you that said plan has not been terribly lucrative in the recent past.    As the plan’s primary architect, I have to say it does a fairly good job of matching stakeholder value with annual rewards to executives.  But I can also tell you that even as someone who stands to profit from this plan, I have always struggled a bit with one element in particular.  What it doesn’t encompass is the tremendous amount of work executives – and all employees – put forth even when the business is in the tank (especially when it’s in the tank for reasons beyond the company’s control).  In other words, company success does not always equate to level of effort, sacrifice, and contribution on the workforce’s part.  This particular issue relates to some of the “faulty assumptions” highlighted in the article - fault with which I cannot argue.  These faulty assumptions border on “criminal” when it really gets right down to it.  And it demonstrates an age-old issue in Corporate America…we do things because it’s always been done that way. 

Why not simplify the approach we take to paying our executives…and senior management…and managers?  Why not focus more on total compensation through base pay.  It may mean more variability to base pay from year to year, but no reason company performance and individual contributions can’t be incorporated into base pay planning.  It means the Board of Directors and Management need to have the cojones to hold others accountable for their contributions (or lack thereof) – something they need to get better at any way.  It means we’ll have to attract executives who aren’t necessarily in it for the selfish, ego-boosting reasons – a good thing for sure.  But it also means there’s a bit more equal footing on pay-for-performance.  It’s time that corporate America wake up to the fact that no one person – or exclusive group of persons – is solely responsible for an organization’s success.  I’m not talking about socialism here – I’m just talking about realism.  I’m also not saying executives shouldn’t be paid a lot of money – I’m just saying the moolah should come with sustained results measured by factors other than what can be derived from a set of financial statements. 

The only problem – well, the biggest one – is that the executives themselves usually create these plans (with the help of the Board of Directors and Compensation Committees who are all cut from the same cloth.)  What’s going to change that?  It starts with the selfless initiation of the executives to “get over it.”  They might as well because I’m convinced the time is rapidly approaching when the market realizes their lofty compensation expectations don’t have to be met in order to attract exceptionally gifted leaders.  Then perhaps…just perhaps…HR/Recruiting can get back into the game by a) actually finding and hiring those people and b) designing a pay-for-performance comp plan which is easy to administer, understand, and doesn’t make you blush.

Categories: Compensation, Talent Acquisition, Theory Tags: Board of Directors, CEO, Compensation, Compensation Committee, Executive Bonuses, Executive Compensation, Get Over It, Pay For Performance, Performance, Wall Streen Journal, WSJ

Do You Have a Personal Board of Directors?

November 18, 2009 Charlie Judy 7 comments

A trusted mentor of mine shared with me long ago the notion of having a Personal Board of Directors.  Would you like to know more?  If so, read on.  If not, take a long walk of a short bridge…

I don’t think this blog’s audience needs a tutorial in the typical role of a Board – most would agree that the presence of this guiding body of wise (and mostly old) sages is a conceptually sound idea: get a bunch of smart, experienced, accomplished, and hopefully diverse perspectives in a room to regularly make sure the company a) has its act together and b) is generally headed in the right direction.  So if this has proven to be a good for companies, I’d argue that it is similarly good for individuals.  Get a bunch of people who are respected, trusted, and recognized in their respective fields to sit on your own Board of Directors.  They shouldn’t come from your current company or job; rather, they should be out there doing other cool things.  Seek them out, interview them, and hire them.  Charge them with helping to guide, counsel, and direct your career (or other endeavor).  Give them a charter and hold them accountable to it.  Tell them you’re serious about this.  Keep them apprised of your progress, call regular meetings to discuss what’s hot, call emergency meetings for matters of particular significance.  And do all of this as a group…not as individuals.  What’s in it for them?  A chance to mentor someone who’s got it going on, an opportunity to network with others, and potentially an opportunity for exotic travel if you hold your annual meetings “off-site.”  What’s in it for you?  A thoughtful, thorough, and committed mechanism for regular mentoring and career development outside of the laborious confines of your company’s process (if it exists at all).   

I don’t know, I kind of like it.  Let me know what you think…

Categories: Career Tags: Board of Directors, Career, Career Development, Personal Board of Directors, Personal Development