Accountability at the TopLooking specifically at executive pay, the expectation for performance should be even greater. In fact, there should be a direct link between executive compensation and the company's stock performance -- a competitive base salary with bonuses and stock options tied to company financial performance exercisable in predetermined tranches instead of at will. An effective way to link the two is to compare the company's stock performance to the S&P 500, as well as the company's peer group over an appropriate period of time. Maintaining a balance between short-term and long-term compensation is essential in order to promote effective risk-taking. Interestingly enough, in 2001 executive pay linked to stock performance was an issue and one of the biggest concerns was with Bank of America ( BAC). Perhaps if something had been done internally then, Bank of America would not be standing at the mercy of President Obama's pay czar Kenneth Feinberg as it is today.
Important Lessons -- Characteristics of Quality LeadershipHaving helped many different companies over the years achieve sustained profitability, I have learned some characteristics that ultimately make a superior leader a strong contributor to achieving and accelerating profitability. Below are a few.
- Demonstrates relentless pursuit of vision and results
- Consistently exceeds profitability objectives
- Demonstrates an unyielding commitment to the business
- Faces tough realities and avoids excuses and rationalization
- Develops an early-warning system to identify problem areas
- Acts quickly to overcome problems as they arise
- Is decisive regardless of popular opinion
- Is ethical, fair, and consistent
- Runs leaner than the management team would prefer