If companies had heeded advice that came out in autumn, last year, all this kerfuffle about ‘what are we going to do...we’re never going to hit those performance targets because of the pandemic’ that not just US executives, but executives everywhere, are worrying about, would be irrelevant.
The vast majority of executives in the US and Europe are rewarded over the long-term with stock that they earn based on meeting certain performance targets; typically called performance shares or performance stock units (PSUs).
This pay approach is endorsed by virtually every compensation consultant, company board, proxy advisor, and even most investors. It is supposed to ensure that executives are only paid well when the company outperforms its peers.
Except it doesn’t work out that way.
Just look at the dance around changing performance targets that resulted from the collapse of the financial markets that began in the spring.
If boards had dropped thos…