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Rethinking CEO Compensation: The Shift from Pay for Performance to Competitive Benchmarking

In the realm of CEO pay, organizations are moving towards Competitive Benchmarking instead of Pay for Performance. This shift has led to underperforming CEOs receiving higher pay, weakening the link between pay and performance. This commentary explores the implications and offers solutions to align CEO pay with actual performance to enhance shareholder value.

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Rethinking CEO Compensation: The Shift from Pay for Performance to Competitive Benchmarking

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Presentation Transcript

  1. Commentary: The Artificial Sweetener in CEO Pay

  2. Pay for Performance or Competitive Benchmarking Pay for Performance is being replaced by Competitive Benchmarking strategies when it comes to CEO pay. Organizations are now paying underperforming CEOs more due to the competitive nature of executive talent. Competitive Benchmarking is weakening the link between pay and performance.

  3. Suggested Solutions Companies are not doing shareholder a favor by increasing an underperforming CEOs pay. Pay the CEO exactly what he or she is worth. Send a powerful message that poor performance will not be tolerated. Some will comply and others will leave.

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