Problem: CEOs' pay comes under much scrutiny and the public reaction is generally negative. Historically, the base pay for CEOs has dropped from 60% of their total compensation in 1960 to about 20% today. During this same time, long-term incentives (stock options) have risen from 15% to about 66%.
- Has the change in the composition of CEO pay been effective in increasing company performance?
- Do you think there are alternatives that might work better for long-term company growth and profitability? If so, provide an example of such an alternative.