April 28, 2017
Pay-for-Performance: Mixed Performance Results
– Liz Dunshee
Recently, Willis Towers Watson evaluated year-end performance for the S&P 1500 – looking at median results for common pay-for-performance metrics. Here’s a teaser:
The results reflect low single-digit growth, a mixed bag in the balance sheet, less than stellar cash flow results, yet strong stock valuations and shareholder returns. This reminds us that the stock market looks forward, i.e., to 2017 and beyond. This is an important reminder when thinking about pay-for-performance alignment because most bonus plans and a sizable portion of long-term incentive plans pay based on past financial performance.
For 2017, investors appear optimistic – as analysts expect typical performance metrics to increase by 1-3%. But an uncertain policy & business outlook has made goal-setting more difficult…