March 6, 2018

Pay-for-Performance: What It’s Not

I’ve been running an executive pay conference for over 15 years now – and I’ve always been loathe to program about “pay-for-performance” because I don’t quite understand it. I’ve always been a hard worker – so I’m the type who gives “my all” in exchange for a salary. That’s all the incentive I really need.

But I certainly can be dis-incentivized. And if that happens, my reaction is to find a new job. And the memo that the United Airlines CEO recently sent to employees – described in this article – would fall into the category of things that dis-incentivized me.

First, there is the tone of the memo – aptly described in the article as tone-deaf. And then there is the subject of the memo: taking away quarterly performance bonuses from many employees (who expected them in the regular course as they hit certain benchmarks) – and instead pooling together that money to give much larger bonuses to those that win a lottery of the bonus money. To capture the essence of that, I’ll use this excerpt from the article:

It’s a curious logic, one that says: “How do we get them to improve? How about taking away their bonus?” To be followed by “heh. heh. heh.”

Can you imagine what the United CEO would say if his compensation was subject to a random drawing. I guess we’ll never know because employee backlash already led to the company shelving this horrible idea…

Comment Letters to the SEC: Having Fun…

For a diversion from your billables, probably the next best thing to reading this blog is perusing the comments submitted to the SEC on various rulemakings. It isn’t too hard to find some written from the couch. For example, in this comment letter, there are harsh words for the SEC from the Mayor of Forest Hills Borough, Pennsylvania (assuming it’s not an impersonation which might be easy to accomplish).

By the way, we do have a nifty checklist about how to craft an effective comment letter to the SEC from Jay Knight of Bass Berry posted in our “Checklists Library.” Please contact me if you would like to contribute a checklist. They are very popular…

Transcript: “Conflict Minerals – Tackling Your Next Form SD”

We have posted the transcript for the recent webcast: “Conflict Minerals – Tackling Your Next Form SD.”

Broc Romanek