Executive Perfomance
How is executive performance measured? How is CEO pay determined?
Broadly, executive performance is a measure of how an executive performed his or her duties at a company. The measure is most often used for determining promotions and pay and can consist of metrics varying from simple the share price of the company (for publicly traded companies), to revenue, increase in book value or customer and employee satisfaction.
For Chief Executive Officers, stock price is the most cited measure of executive performance – though the practice has many critics that argue it leads to shortsighted decisions and excessive risk taking.