CALIBRATION OF EXECUTIVE COMPENSATION TO PERFORMANCE
The concept of calibrating pay to performance is the ‘market value measure’. On the ‘X’ axis we could include shareholder value, revenue growth, or other suitable metrics of business performance. The key to the model is ensuring that the measures being selected are pertinent, so that the right set of behaviours are being encouraged. To simply say that a particular executive is a high performer may not only be a sweeping generalization, it may also be in reference to measures that are not currently important to the organization. A pay calibration model is illustrated in Figure 8.1.
Table 8.1 Performance guide charts
Table 8.2 Measurement of performance criteria
| Criteria | Parameters ... |
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