Last summer I wrote a post called How to succeed in business without really performing and I’m here to tell you the practice is alive and well.

Even in two of the most beleaguered companies.

‘The compensation committee on Washington Mutual’s board looked like it was on the right track by not giving CEO Kerry Killinger a cash bonus in 2007. After all, operating earnings fell 40 percent last year and the shares of the nation’s largest thrift tumbled 68 percent in price.’

But that was then and this is now.

‘The Seattle-based company late Monday disclosed in a securities filing that its board changed the executive pay structure to exclude certain credit costs when calculating cash bonuses.

Now, 30 percent of the bonuses will be tied to operating profits excluding expected mortgage defaults or the costs of real estate foreclosures. Another 25 percent of the calculation will exclude some restructuring and business resizing costs as well as foreclosures. The board will ‘subjectively’ evaluate the company’s performance in credit-risk management.’

Upscale home builder Toll Brothers CEO missed his bonus for the first time 16 years, so the Board has proposed changes—but at lest they’ll be put to a shareholder vote. (Think it’s likely to pass?)

Ah, the perks of the corner office—screw up/get paid. What more can anyone ask?

Do you think that executive pay should be tied to performance?

Should it be subject to whimsical changes?

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This entry was posted on Monday, March 10th, 2008 at 12:15 am and is filed under Business info, Compensation, Culture. You can follow any responses to this entry through the RSS 2.0 feed.
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