Discuss the metrics tied to the CEO’s inventive compensation. Are they sound metrics or not?  Determine if compensation is reasonable considering the company’s financial performance.

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The metrics tied to the CEO’s inventive compensation vary depending on the company, but generally include such items as stock options, long-term incentives and performance bonuses. These metrics can be very useful as an incentive to executives to work hard towards achieving goals that are long-term beneficial. A CEO might be motivated by stock options, performance bonuses or a target to grow profits 10% per year.

Much depends on several factors, including industry benchmarks and financial performance. It would be reasonable to pay a CEO commensurate compensation if the company performs well. But if performance is below that of other companies in the sector, then there could be cause for concern. Each organization will decide what is reasonable for them based on their specific circumstances.

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