Entrepreneur and former public company CEO Douglas Günthardt speaks with Hermann J. Stern on relative performance measurement and management compensation. The exchange contains encouraging words, new insights and constructive criticism on the topic of promoting relative short and long-term executive compensation.
It covers the use of relative profit, relative growth, relative shareholder returns and - with a perspective on what’s to come soon - environment, social and governance performance compensation, the so called ESG bonuses.
Douglas doesn’t stop short on the question of how you can make executives want relative performance measurement. “It pays more” is Hermann’s simple yet often neglected answer. Most executives are overconfident, rendering their own targets excessively high and their variable pay below what they would be getting if their performance were compared relative to peers.
Outperformers such as SIKA were the first to understand this, now a well documented case study available for download.