Executive compensation: when does "pay for performance" become excessive?

The CEO-to-median-worker pay ratio is a useful starting point, but it does not tell the whole story. I focus on three things: (1) what percentage of total comp is genuinely at risk and tied to multi-year performance metrics, (2) whether the performance metrics are rigorous or easily gamed, and (3) how the company handles pay in down years — do they reprice options or adjust targets? The best compensation committees set stretch goals and stick to them.

Say-on-pay votes are one of the most powerful tools shareholders have. Even when they are advisory, a significant dissent vote (say 30%+) sends a clear signal. I would encourage everyone here to actually read the CD&A (Compensation Discussion and Analysis) section of proxy statements before voting. It is where you find the real details about how pay decisions are made.