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Biweekly Newsletter – Executive Compensation Decisions

When a board of directors is determining the compensation for a company’s CEO and other top level executives, there are many factors that must be examined before enacting a specific compensation plan.

Below are multiple articles related to executive compensation decisions:

-One important thing to consider when evaluating any investment opportunity is executive compensation. An executive who is not compensated properly may not have the correct incentive to preform with the best interests of the shareholders. Justin Kuepper explains how to evaluate executive compensation in his article, titled “Evaluating Executive Compensation.”

-In Carmen Nobel’s article, titled “Who Really Determines CEO Salary Packages?” Nobel touches on why, although every CEO and company are very different, executive compensation packets generally look very similar. Two reasons for this are that many directors belong to boards at multiple firms and the second is compensation consultation commonality.

-Some people feel that CEOs are actually being compensated far too highly, including Steven Clifford in his article, titled “How Companies Actually Decide What to Pay CEOs.” In this article, Clifford argues that a luxury tax on any company that pays an executive over six million would be a solution to the over payment of executives.

By Peyton Wille, CFO Consulting Partners