“Bank highlights four key performance measures that drive executive pay, admits missing them, but gives CEO a raise anyway.” This quote was taken from the Globe and Mail article, “Rich pay doesn’t align with performance at BMO.” The more common problem is for companies to reward employees, base on quantity other than quality. The executives encourage workers to be creative and satisfy the customers, but workers are ironically rewarded for the number of output/ sales they make disregarded the quality of the output/sales. This is usually when the balanced scorecard comes in handy, but for BMO, it is another story. The “BMO board’s stubborn insistence on richly paying Mr. Downe (CEO of BMO) continued in 2009 despite the bank’s failure to meet its primary goals.” So Mr. Downe is not being productive or creative with:
Cash earnings per share fell 18 per cent, rather than growing 3.9 per cent. Return on equity was 9.9 per cent instead of 12.3 per cent. And its two-year total shareholder return was 3.8 percentage points below the average of its peer group.
With these kinds of numbers, he still gets a raise. It must be a good life being a CEO of BMO.
Read more on http://www.theglobeandmail.com/globe-investor/rich-pay-doesnt-align-with-performance-at-bmo/article1522843/