Strategic Pay for Future Value

With Janet Langford Kelly - This Article (Corporate Governance Advisor - May-June/2005) is the first article in a 3 part series in the Corporate Governance Advisor.

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This article challenges much of current thinking and models about executive compensation. Over 50 % of enterprise value of publicly listed companies is based on an expectation of future value to be created. Yet most executive compensation and related proxy disclosures are linked to 1 - 2 year accountabilities from current operations, and thus is really operational pay.

The 5 Levels of CEO work assist Boards in fulfilling their duty to shareholders in designing Strategic Pay to create Future Value and justifies the true Organization Value Added-OVA™ of executive roles that warrants differential compensation.

A model CEO / executive Pay for Performance frame-work is illustrated. Boards that have no process to set strategic pay linked to the proper CEO Level of Work may be in breach of their fiduciary duty to shareholders.

Major organizations and consulting firms that provide Requisite Organization-based services

A global association of academics, managers, and consultants that focuses on spreading RO implementation practices and encouraging their use
Dr. Gerry Kraines, the firms principal, combines Harry Levinson's leadership frameworks with Elliott Jaques's Requisite Organization. He worked closely with Jaques over many years, has trained more managers in these methods than anyone else in the field, and has developed a comprehensive RO-based software for client firms.
Former RO-experienced CEO, Ron Harding, provides coaching to CEOs of start-ups and small and medium-size companies that are exploring their own use of RO concepts.  His role is limited, temporary and coordinated with the RO-based consultant working with the organization
Founded by Gillian Stamp, one of Jaques's colleagues at Brunel, the firm modified Jaques;s work-levels, developed the Career Path Appreciation method, and has grown to several hundred certified assessors in aligned consulting firms world-wide recently expanding to include organization design