From Ivey Business Journal - May/2004

Summary:

Too many CEO's are overpaid not because their company underperforms but because they are being held accountable for work that is operational versus strategic, but paid as if they were doing this strategic work.

This article outlines the failure to establish proper accountabilities and how these should be measured. This includes accountabilities between investors and boards, boards and CEO's, and CEO's and their executive team, which leads to a capitalist system that lacks accountability to shareholders as owners.

All Boards and CEO roles are not created equal and 5 levels of CEO work & capability and 5 Levels of Board accountability and capability are identified.

When the level of capability of the Board and CEO are both below the Level of Work required by the enterprise to sustain itself, then shareholder capital is at its greatest risk in losing value in starting new business ventures, transforming existing business models and undertaking acquisitions. A new model for pay for performance linked to these Levels of Work and Accountability is described.

 ARE BOARDS AND CEOS ACCOUNTABLE FOR THE RIGHT LEVEL OF WORK?_Clieaf (338.01 kB)