CEO Performance Review

Reviewing the performanace of the CEO is a crutial function of the board.

1. Can the CEO show cause-effect between specific actions he initiated, championed, or otherwise drove and any value created for the company? Can he and the board differentiate between those things he made happen and those things that just happened on his watch?

2. Has the CEO taken credit for share price increases during a period of rising markets, but distance himself from any responsible for falling share prices?

3. Is the current CEO riding the coatails of his predeccessor?

4. While the management team called for increased accountability from vendors and employees in all areas of performance, has the board demanded that same accountability from senior management? Has it been delivered? How do we measure performance?

5. Has the company calculated the true total cost, including adminstration time and support, for various perks that were once viewed as a less expensive substitute for cash compensation? Has the board ever reviewed the use of country club membership, apartment, staff, or other resources to determine whether they are being used, in fact, as described in the CEO's contract?

6. Considering all forms of compensation, including the economic vale of such perks as use of apartments or company jets, how much each executive received ineach of the past three years? How much benefit has gone to directors?

7. How has the growth of this compensation compared to the growth of company's income, balance sheet, and share value, both on absolute basis and in comparision to peer companies?

8. Have we assembled a truly representative peer group of companies and CEOs to compare against our own? How did we choose these peers? Can we make a real comparison without knowing the hiden benefits and perks available to other CEOs we're comparing to our own?

Source: Marilyn Seymann and Michael Rosenbaum, The Governance Game: Resoring boardroom exellence & Creditability in Corporate America, Aspatore Inc, 2003