A corporation's culture is the most important factor influencing the attitudes and behavior of executives in most companies, according to 48% of corporate, academic and consulting leaders surveyed by AEG, a strategic management advisory firm. Some 25% of respondents believe a company's share price is the most influencing factor; 23% believe it is executive incentive compensation; and 4% cited other reasons.
In addition, 63% of respondents said executive compensation is best evaluated for "appropriateness" and "fairness" against a peer competitor group; 14% said pay should be measured by a fixed ratio between executive pay and that of the typical employee; 14% said there should be direct proportionality between executive pay and shareholder value; and 9% listed other reasons.
Some 68% of respondents said most companies focus on short-term earnings as the primary measure of performance; 16% said companies use both short-term and long-term earnings to measure performance; and 16% said companies use longer-term financial and non-financials measures of performance.
Some 41% of respondents said the increasing use of "pay for performance" is the most visible trend, positive or negative, in executive compensation; 27% said the most visible trend is the use of more detailed peer group data; 25% said it is greater disparity between executive compensation and shareholder interest; and 7% listed other reasons.
Among other findings, 84% of respondents said companies focus "some but not enough" on ethical behavior when identifying and developing future leaders, and 80% said boards of directors should be more involved in succession planning.
"This poll shows that while the causes of corporate malfeasance can be identified, the best practices tools for prevention have yet to be fully implemented by many of today's boards and senior management," Larry Adelman, AEG principal, said in a statement.
AEG received responses from 56 leaders at a Center for Corporate Change forum June 2-4 in Beaver Creek, Colo. The center is part of the Vail Leadership Institute, an independent leadership research organization.