Compensation consultants have long argued that owning stock best aligns the interests of the CEO with those of the company’s shareholders, who are the ultimate owners of the company. Yet companies also note that that sticking to pre-set financial goals during economic downturns may not reward corporate leaders for any critical decisions they make that ultimately protect their companies from financial harm or position them to flourish when times improve.

“No matter how good your incentive plan is, in one year out of 10 you are going to have to make adjustments as to what’s fair,” said Alan Johnson, one of the nation’s top compensation consultants. “When goals become impossible to achieve based on something you could never have anticipated, I am pretty sympathetic to [a company board that says], with the opportunity a CEO had, they did pretty well.”

CBS News / April 22, 2021