A former department head of ours would receive an annual bonus regardless of how bad a job he did. And it's not like his bosses didn't know what he was doing. "Squished morale? Here's your money. Angered customers with a thoughtless remark? Have some more." Imagine how well the bloodless freak would have made out if he had fired all of the people who did the real work. "Your productivity has gone to zero. A hearty congratulations for a job well done. We've made the deposit to your Swiss account." But it's not like I'm bitter.
I do believe, like most of you that CEOs, CFOs, and whatever other Os are out there, get paid way too much. To set a minimum salary plus a percentage of profits seems like a good solution but there is a big drawback. The store could have record losses and the person at top would still get a massive paycheck by just cutting the number of workers. happens all the time in the business world. So that incentive is not all that great folks.
My opinion would be to lay out the duties and set one rate of pay. No contract and NO SEVERANCE PAY. The man or woman who can't get the job done then fire him or her. The individual would be motivated to do the job properly.
Did you know that this situation is actually caused by policy and procedure adopted by large companies? It works like this:
1) Companies independently adopt a policy that CEO compensation is targeted at the median of a defined group. Compensation consultants believe this is the fairest, most objective approach, so all companies adopt it without benefit of collusion.
2) Implement the policy by defining the CEO group benchmark as tightly as possible. For example: CEOs of Fortune-100 (NOT 500 - that's too broad) telecomm companies.
3) Roughly half of all CEOs in the group are below median compensation (DUH!). Companies independently apply their policies, awarding substantial immediate raises regardless of merit (or lack thereof).
4) These raises increase the median comp for CEOs in the group, thereby setting off another round of huge, immediate pay increases.
5) Repeat steps 3 and 4 ad infinitum.