Falling Stock Prices Don’t Hurt Bonuses

Money
Close to half of companies asked in a recent survey said that their shareholders’ returns were lower this year than last year.

But among those 42 percent, 54 percent said they expected their bonus plan to be fully funded, CFO.com reports. “It boggles the mind. How do you articulate that to your investors?” asks Eric Larre, consulting director and senior executive pay consultant at Towers Watson.

“Compensation committees could still exercise discretion to change their 2011 formula for bonus payouts, which for a calendar-year company are typically paid in April for the previous year’s performance,” CFO.com adds. “But 87% of survey participants said they don’t expect that to happen.”

This is completely crazy. Forget justifying this to investors—try justifying these bonuses to employees. Oh wait, most companies aren’t. Just recently we’ve seen tales of newspaper bonuses coming out that seem to imply that management has absolutely no regard for the people who put out its product.