News...
12. 18th October 2005. Financial Review Information
Hard cash the bonus of choice
Of the 42 companies surveyed by THE AFR, only six chief executives were paid bonuses despite reporting weaker earnings or revenue.
McLean Fearnett Jackson principal Beth Jackson said revenue or earnings growth were not the only measures against which a CEO's performance could be assessed. She noted that most companies were conscious of ensuring rewards were commensurate with performance following a number of high-profile remuneration scandals in the US.
"There may well be some short-term pain that sometimes has to be taken, and we've seen some new CEO's whose job it is to tighten everything up, so there will naturally be some pretty tough times through that process," Ms Jackson said.
"Sometimes some of these things are a bit inimical in terms of short-term results."
However, she also voiced concern that too much attention might be being paid to short-term incentives and that the move away from options in recent years could reduce the focus on long-term goals.
"That has been a bit of an issue for many people. It is a bit of a worry because if you've been around for a little bit of time you tend to have a strong sense of deja vu and that has to do with short-term planning cycles," Ms Jackson said.
