The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Mon, 01 Jun 2026 18:58:06 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Paying for “The Right” Performance – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Paying for “The Right” Performance https://corpgov.law.harvard.edu/2019/05/16/paying-for-the-right-performance/?utm_source=rss&utm_medium=rss&utm_campaign=paying-for-the-right-performance https://corpgov.law.harvard.edu/2019/05/16/paying-for-the-right-performance/#comments Thu, 16 May 2019 12:55:39 +0000 https://corpgov.law.harvard.edu/?p=118029?d=20190516085539EDT Posted by Melissa Burek and Mike Bonner, Compensation Advisory Partners; and Melanie Nolen, Corporate Board Member, on Thursday, May 16, 2019
Editor's Note:

Melissa Burek is Founding Partner and Mike Bonner is a Senior Associate at Compensation Advisory Partners (CAP); and Melanie Nolen is a Research Editor at Corporate Board Member. This post is based on their CAP memorandum. Related research from the Program on Corporate Governance includes Paying for Long-Term Performance (discussed on the Forum here) and the book Pay without Performance: The Unfulfilled Promise of Executive Compensation, both by Lucian Bebchuk and Jesse Fried.

What makes a company successful?

Stock price growth? Meeting the business plan? Beating external expectations? Long-term stability? Companies must consider success across multiple fronts, and boards of directors play a role in defining success by working with management to set the strategic plan and by overseeing how the company progresses toward the achievement of the plan.

Incentive plans are foundational to motivating the senior management team to achieve the goals of a company’s strategic plan. Determining how to best measure and reward performance against these goals is key to designing effective incentive compensation programs that ensure proper alignment of pay outcomes with various degrees of success against the plan.

To determine how board members measure performance and incorporate it in their company’s incentive compensation plans, Corporate Board Member and Compensation Advisory Partners partnered to survey more than 250 public company directors. In this post, we present our findings and share our perspective on these key issues.

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