The topic is: Do we best serve the shareholders by setting absolute or relative performance goals? ***You have to answer the topic question and all the questions below as well. An absolute system is unambiguous: “Earn $50 billion this year for us shareholders, Ms. CEO, and go home New Year’s Eve with $50 million, as a small token of our appreciation.” However, what if the company absolutely, positively cannot achieve that target? The economy as a whole is in a tailspin. The company’s key overseas supplier of raw materials was suddenly nationalized by a newly elected government. Or the goal itself is just downright silly. Net result: the company ‘only’ earned $40 billion. Should our leader get her $50MM? $40MM? Maybe nothing, for not meeting the goal? Would you feel differently if this company outperformed every other company by a wide margin? How do you address the issues of setting appropriate performance goals?
#serve #shareholders #setting #absolute #relative