Christian & Timbers, the global retained executive search firm, reports that stock options are out for CEO and senior executives, cash bonuses are in. In the past six months, more than 50 percent of the time the firm has seen its clients weight cash bonuses more heavily than stock options when negotiating pay packages with top executives. This compares to less than 25 percent of the time just a year ago. In particular, the firm is seeing more bonuses being structured based on the company''s performance within its own market sector, usually using EBITDA (earnings before interest, taxes, depreciation and amortization).
According to Steve Mader, CEO of Christian & Timbers, "Boards are seeking to measure added economic value from the activities of the CEO and top executives. As a result, they are much more focused on company performance versus short term stock price. Compensation and bonus structures are now based on hard earnings and cash generation. In addition, boards are comparing a company''s performance to others in the same industry. Two years ago, we saw bonus compensation structured this way about ten to 25 percent of the time, now we are seeing it more than half the time. By the middle of next year, this will be the norm.
"In the past, a company could be performing well in the stock market, yet losing market share to competitors. Its stock price increased because it was in a hot market. Now boards are basing bonuses on competitive comparisons of earnings, margins and market share compared to other companies in the industry.
"The days of driving up the short term stock price to get this year''s bonus are over. Boards are thinking longer term. We have evolved to a post-Enron world where real profits, real performance and cash are king," he said.
The HR industry´s premier online community and resource for Human Resource professionals: HR, human resources, HR community, human resources community, HR best practices, best practices in human resources, online communities for HR, HR articles, HR news, human resources articles, human resources news, HR events, leadership, performance management, staffing and recruitment, benefits, compensation, staffing, recruitment, workforce acquisition, human capital management, HR management, human resources management, HR metrics and measurement, organizational development, executive coaching, HR law, employment law, labor relations, hiring employees, HR outsourcing, human resources outsourcing, training and development
hr.com.
human resources management resources for hr professionals. |
HR menus
|
HR events
|
HR Sitemap