Determining Executive Pay: Boards Need to Assess CEOs' Behavior, Not Only Their Performance
NEW YORK, Jan. 6, 2014 /PRNewswire/ -- "Everyone expects boards to assess the performance of CEOs when determining their pay, but they must also assess the manner in which the CEO performs," says executive compensation expert Bruce R. Ellig, author of the just-released third edition of The Complete Guide to Executive Compensation.
"Surrounded by their 'Praetorian Guard' of direct reports who seek big bonuses and job security, many CEOs are shielded from the truth," he says. "After awhile, some CEOs believe that they are accountable to no one – not the board of directors, not the shareholders, and sometimes, not even the law. Some even believe they are the law. This view is reinforced when Wall Street and the public laud business results but overlook executive behavior."
"The need for an appropriate pay package has been replaced in many instances by a sense of entitlement, greed, and inappropriate behavior. Believing in their own infallibility has led some executives to put themselves above all other stakeholders, when in reality they should be last. Their compensation should be based on how well the employees, the customers, the community, the suppliers, and the shareholders do."
"A culture where there is a lack of candid discussion about appropriate behavior at all levels of the organization creates a climate where inappropriate action can also occur, such as financial fraud, insider trading, and tax evasion," Mr. Ellig observes.
About Bruce Ellig
Bruce R. Ellig is a noted authority on executive compensation with more than 35 years of experience. Before retirement, he worked at Pfizer Inc. for 12 years as corporate vice president and head of worldwide HR, reporting directly to the chairman and CEO. During this period, he also served as secretary to the board's compensation committee, in addition to being a member of the internal compensation committee, headed by the chairman and CEO. Mr. Ellig has served on several boards of directors (both for-profit and not-for-profit), including as chairman of the national board of directors of The Society for Human Resource Management (SHRM). He also served on several advisory boards and was a member of numerous premier HR organizations. He is a frequent speaker, and author of well over 100 articles and eight books. Mr. Ellig's expertise has been recognized by his professional peers with numerous honors and awards including several "Man of the Year" awards and the prestigious Lifetime Achievement Award from SHRM and WorldatWork. He was elected to the National Academy of Human Resources in 1993, a year after its formation. Mr. Ellig received the Distinguished Business Alumni Award from the University of Wisconsin where he earned his BBA and MBA and was elected to Beta Gamma Sigma and Phi Beta Kappa.
SOURCE Bruce Ellig