Pay by ethics

There’s a new trend in rewarding senior executives, namely to decide their pay based not only on financial performance but also on other “softer” measures. Here’s an example:

Calvert, the nation’s [USA’s] largest family of socially responsible mutual funds, is trying a new proxy tactic. It has filed resolutions pressing four companies to begin rewarding executives according to how well they meet the firm’s own social goals, as well as financial ones. This could mean pay hikes for executives who oversee a surge in employee satisfaction or a drop in toxic emissions, to name a couple of possibilities. Response has been encouraging, the mutual-fund company says. Dollar General and Xerox have agreed to link incentives to their firms’ social goals…

Very interesting. The Christian Science Monitor has an excellent article on new trends in executive pay, which also mentions Ben & Jerry’s policy of the average executive making no more than 5 times as much as the average factory worker. Cool!

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