MUSINGS ON COMPENSATION AND PERFORMANCE

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JUNE  19,  2012

JUNE  5,  2012

MAY  21,  2012

MAY  8,  2012

Execu&ve  Compensa&on  Contradic&on:  Differen&ate…But  Don’t  Innovate?A  recent  ar=cle  in  London’s,  The  Telegraph  “Overhaul  the  role  of  pay  advisers,  urges  Lord  Myners”,  pushes  for  more  accountability  on  the  part  of  the  advice  provided  by  execu=ve  compensa=on   and   remunera=on   consulta=ons.   At   issue   are   recent   pay  packages  that   met   with   shareholder   ire,   including   those   at   Barclays  and  Cookson  Group.At  both  companies,  CEOs  had  large  compensa=on  packages  approved  by  their  MORE...

Compensa&on  Archery:  Aim  for  the  Middle  and  Adjust  as  Required?Archery  is  an  interes=ng  sport.  Great  archers  hit  the  center  of  the  target  nearly  every  shot.  For  those  of  you  who  have  never  shot  a  bow  and  arrow,  you  might  be  surprised  that  to  hit  the  target   you  have  to  aim  somewhere  else.  Some=mes  you  must  adjust  for   the  wind.  Other  =mes  you  must  adjust  for   al=tude.  Even  on  the  calmest  days  at  sea  level  you  need  to  aim  higher  than  the  target,  just  to  account  for  gravity.A   key   aspect   of   archery   is  that   you  perform   in   solitary   manner.     You  stand   s=ll,  MORE...

Like  The  Auto  Industry,  Compensa&on  Must  Create  More  HybridsI   read   a   recent   ar=cle   that   discussed   the   annual   Rotman   Design   Challenge.   The  compe==on  pits  teams  from  Design  and  MBA   programs  to  determine  the  value  of  design   methods   in   business   problem   solving.   This   got   me   to   thinking   about   the  eternal   compensa=on   debate   of   program   design,   versus   business   strategy   (vs.  communica=on.)   The  argument   is  whether   design   is  more   or   less   important   than  understanding  the  “business  data”  and  whether  both  of  these  are  trumped  byMORE...

What  Are  Shareholders  Really  Saying  on  Pay?  “Danny,  if  I  have  to  tell  you  one  more  4me  to  stop  jumping  on  the  bed,  you  are  going  to  get  it!”  

The  warning  is  not  enough  and  Danny  jumps  on  the  bed  again.“Danny,  next  4me  you  jump  on  the  bed  I’m  taking  away  your  allowance.”

Shareholders  have  become  much  like  lenient,  but  frustrated  parents.This  is  how  investors  seem  to  be  using  Say  on  Pay  (SOP).  When  you  look  at  their  SOP  MORE...

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JANUARY-­‐JUNE  2012

MUSINGS ON COMPENSATION AND PERFORMANCE

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APRIL  26,  2012

APRIL  4,  2012

MARCH  22,  2012

MARCH  12,  2012

Great  Compensa&on  Pros  are  Like  Swimmers  not  RunnersI   recently   had   a  medical   issue   that   put   me  out   of   commission   for   a  few   weeks.  Although  this  gave  me  some  =me  to  reflect  and  catch  up  with  friends  and  colleagues,  it  also  made  me  realize  that,   like  nearly   everyone  reading  this  ar=cle,  I  really   didn’t  have   the   =me   to   put   my   work   on   hold.   That   is   when   I   realized   that   being  compensa=on  professional  is  ocen  like  being  an  open  ocean  swimmer.Last  year  a  friend  came  out  to  visit  San  Francisco  so  her  12  year-­‐old  could  par=cipateMORE...

5  Best  Prac&ces  for  Driving  Condi&ons  and  Compensa&on  ProgramsSimilar  to  when  we  are  driving,  compensa=on  professionals  must  be  acutely  aware  of  the  condi=ons  around  us  when  we  want  to  implement  change.  When  the  weather  is  nice  and  the  roads  are  dry,  we  can  speed  to  our  des=na=on  with  confidence  that  our  vehicles  will  predictably  go  where  directed.  When  it  gets  a  bit  wet,  we  take  a  bit  more  care  and  slow  down.     It   may   take   a  liele  longer,   but   we  know  we  will  reach  our  des=na=on.  The  real  trick  is  gefng  someplace  when  the  roads  are  icy.MORE...

The  Top  4  Risks  in  Pay  for  PerformancePay   for  Performance,  ("P4P"  for  us  cool  compensa=on  pros)  is  all  the  rage.  Those  of  you  who  read  my  pos=ngs  regularly  know  that   I’m  a  big  proponent  of  performance-­‐based  compensa=on,   in  its  many   forms.   Despite  being  a  big  supporter,   or   perhaps  because  of   it,   I  think   its   important   to  discuss  the  major   risks  involved  with   these  programs.  (If  you  deal  with  this  issue  frequently,  you  might  want  to  skip  to  #4.)1.  Incorrect  MetricsMORE...

Execu&ve  Compensa&on:  The  Poli&cal-­‐Taxa&on  ConspiracyWe  hear   the  cries  every   day.   “Execu=ves  make  too  much  money.   Let’s  raise  their  taxes!”  “Execu=ves  are    our  job  creators.  Let’s  cut  their  taxes!”  Perhaps  key  members  of   both   sides   of   this  argument   are   keeping   the   focus  on   compensa=on   levels  to  deflect  from  where  taxes  and  poli=cal  contribu=ons  come  from.  Are  there  underlying  reasons  for  poli=cians  to  avoid  strong  support  for  performance-­‐based  compensa=on?In  this  elec=on  season,  we  are  all  aware  that  the  large  contributors  to  poli=cal  racesMORE...

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JANUARY-­‐JUNE  2012

MUSINGS ON COMPENSATION AND PERFORMANCE

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FEBRUARY  29,  2012

FEBRUARY  13,  2012

FEBRUARY  1,  2012

JANUARY  23,  2012

Follow  the  Leader  is  Dangerous,  but  So  is  Being  the  LeaderAs  children,  we  play   Follow  the  Leader  with  the  goal  of  fifng   in.   In  this  game,  kids  will  do  whatever  the  person  in  front  of  them  does.  I  have  actually  seen  kids  fall  down,  just  because  the  person  in  front  of  them  tripped  and  fell.  As  adults,  we  learn  that  to  be  a  leader,  you  must  worry   less  about  fifng  in  and  more  about  doing  what  is  right  for  a  given  situa=on.As  compensa=on  professionals,  we  are  constantly  asked  to  build  a  balance  betweenMORE...

Is  it  Time  to  Change  the  Equity  Compensa&on  Paradigm?Even   with   the   explosion   in   performance-­‐based   equity,   most   equity   compensa=on  plans  look  very  much  like  they  did  almost  twenty  years  ago.  Stock  op=ons,  restricted  stock  unit   and  employee  stock  purchase  plans  would  be  familiar   to  a  =me-­‐traveler  from   1995.   The   biggest   differences  are  in   the  size  of   the  payouts  and   that   many  par=cipants  receive  equity   as  an  addi=on   to   base  and  bonus  pay,   instead  of   as  a  replacement  for  some  of  it.  The  similari=es  now  and  then  are  almost  too  numerous  MORE...

Where  in  the  World  is  Carmen  San  Diego’s  Equity  Compensa&on?Some  of  you  may  remember  the  video  game  and  game  show  “Where  in  the  World  is  Carmen  San  Diego”  (WITWICS.)  It  was  very  popular  more  than  a  decade  ago.  The  goal  of  the  game  was  to  find  the  villain,  Carmen  San  Diego,  based  solely  on  key  facts  about  different   loca=ons  around  the  world.   The  players  had  to  know   the  specific   country  differences   that   made   it   possible   to   iden=fy   each   unique   loca=on   and   capture  Carmen.  Compensa=on  around  the  world  is  as  unique  in  size,  design  and  structure  asMORE...

Don’t  Tell  Me  I’m  Great  If  I’m  Not!I  have  both  friends  and  clients  who  have  been  struck  by   an  unfortunate  dilemma.   I  have   a  couple  of   friends  who   have  been   told   one   thing   for   months,   and   perhaps  years,  only  to  find  out  that  the  truth  they  knew  wasn’t  the  “real”  truth.  I  have  clients  who  need  to  realign  pay   for   people  who  have  been  told  they  were  top  performers  when,   in  fact,   they   are  less  than  adequate.   In  both  cases  it   seems  more  like  senior  managers  were  trying  to  be  nice,  rather  than  sneaky.MORE...

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MUSINGS ON COMPENSATION AND PERFORMANCE

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JANUARY  13,  2012

JANUARY  4,  2012

Execu&ve  Compensa&on  and  the  Great  Wizard  of  OzExecu=ve  compensa=on  holds  as  much  mystery  and  magic  as  the  Great  Wizard  of  the  Emerald  City.    Of  course,  if  the  curtain  were  to  be  pulled  back,  the  real  magic  would  be  found   in  how  a  lack  of   informa=on,   combined  with   fear   and   imagina=on,   have  colored  the  pay  of  all  execu=ves  with  the  same  brush.  Remember  that  when  Dorothy  and  Toto  met  the  wizard  he  was  just  as  unhappy  and  scared  as  they  were.I  find  it  amusing  and  frustra=ng  that  there  is  so  much  misinforma=on  about  execu=ve  MORE...

Are  Your  Performance  Reviews  like  an  Annual  Physical?I  don’t  know  anyone  who  looks  forward  to  their  annual  physical.  There  is  very   liele  about  the  process  that  exudes  posi=vity.  Nearly  all  of  us  know  that    we  could  have  eaten  beeer,  exercised  more  or  paid  beeer  aeen=on  to  our  health.  Even  those  in  the  best  of  health  dread  the  thought  that  this  might  be  the  year  that  something  “serious”  may   be   found.   The  poten=al   “big-­‐=cket”   items  overwhelm   the  progress   that   may  have  occurred  at  other  points  in   the  year.  The  process  can  also  a  bit   too  personal,  MORE...

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Dan  Walter  is  the  President  and  CEO  of  Performensa=on  an  independent  compensa=on  consul=ng  firm  focused  on  the  needs  of  private  and  public  companies.  Dan’s  unique  perspec=ve  and  exper=se  includes  equity  compensa=on,  execu=ve  compensa=on,  performance-­‐based  pay  and  talent  management  issues,  Dan  is  on  the  board  of  the  Na=onal  Center  for  Employee  Ownership,  a  partner  in  the  ShareComp  virtual  conferences  and  the  founder  of  Equity  Compensa=on  Experts  a  free  networking  group.  Dan  is  frequently  requested  as  a  dynamic  and  humorous  speaker  covering  compensa=on  and  mo=va=on  topics.  Connect  with  Dan  on  LinkedIn  or  follow  him  on  Quora  or  Twieer  @performensa=on.

Publica=ons  include:  “The  Decision  Makers  Guide  to  Equity  Compensa=on”,    “If  I’d  Only  Know  That”,  “GEOnomics  2011”,  “Equity  Alterna=ves”  and  “Communica=on:  The  Key  to  Winning  the  Rela=ve  TSR  Race”.

All  ar&cles  authored  by:  Dan  Walter,  President  and  CEOPerformensa&on  Consul&ng,  LLC

514  Precita  Ave,  Suite  100,  San  Francisco,  CA,  94110  415.625.3406  (direct/mobile)  |  Toll-­‐free  877-­‐803-­‐9255,  ext  700  |  415.821.9883  (fax)  

dwalter@performensa&on.com  |  www.performensa&on.comwww.compensa&oncafe.com    |  www.linkedin.com/in/danwalter

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