Question: “My company is looking for a better way to evaluate the performance of our CEO. It seems like “stock value” has been the primary way to do so, at least historically. Is it still the best performance measure of a CEO’s efforts to increase the value of a company?” Answer: It is the “common measure” historically, but far from the “best!” A company’s stock market value is affected by many “psychological factors” that influence stock prices in general. For example, in th

Question: In my role as a Compensation Manager, I compare my company’s internal pay rates against the marketplace. But I’m always curious as to whether I should be using the Weighted Average or the Median as the “central measure of tendency”? Is one better than the other? Answer: Perhaps not “better” but there are good reasons to use one or the other. It depends upon how you value each of these measures, and to some extent upon what you are hoping to accomplish. Let’s look at

Are executives paid too much? Maybe, maybe not! A student of mine once made a presentation about the appropriateness of executive pay levels. As the ever-Socratic Instructor, probing for the truth, always testing his students’ ability to defend their positions on various topics in the classroom, I asked him for his best view as to why executive pay levels are justifiable? Sweating just a bit, he replied “because that’s the way companies pay them.” He knew, and I knew, that th

Question: “I’m confused. I’m hearing and reading a lot about the issue of “equal pay for equal work,” especially in this 2016 political season. I thought we already had an equal pay law that protects females?” Answer: We do! It’s called the Equal Pay Act of 1963, and was intended primarily to protect females in the workplace from pay discrimination, although fifty one years later, it is also protecting males who work in female dominated occupations. Briefly, it says that a ma