11 Companies Rewarding Failure: Financial News – Yahoo! Finance

It is interesting to see these compensation articles. I think that too much of an executive’s reward structure is based on short-term goals and the executive has often disappeared when the company collapses in the long-term (5-years or more.)

Why not develop a long term incentive system along the line that sets up long-term and short-term goals for an exec, with commensurate rewards based on whatever metrics the board wants to use. But, the exec can not collect the short-term rewards unless the long-term goals are met.

So, if an exec gets a bonus for raising the stock price 20% one year, and has a 5-year goal of doubling customers, the exec doesn’t collect the 1 year bonus for at least 5 years and then only if the customer base has doubled.

There are a fair number of variation on this theme; the main point is to hold an exec’s feet to the fire to ensure the long-term success of a company and not to allow an exec to gut a company to promote short term success. (I wonder what would have happened to the dot-com bubble if no one got any rewards until the long-term goals were realized?)

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