Goldstein and Associates discuss Short-Termism, Performance Goals and Executive Compensation
As the struggle for corporate control between advocates for long-term, sustainable economic growth and promoters of short-term financial performance rages on, we thought it made sense to highlight the point at which this battle manifests itself most frequently in discussions of executive pay: the selection of performance goals in incentive compensation programs. Specifically, we wanted to call attention to the brewing debate over the use of earnings per share and similar goals (EPS) in performance-based pay programs.
For many good reasons, EPS is among the most common financial performance metrics used by public companies in their incentive compensation programs. First, …