CEO pay has yet to grasp new goals

ATLANTA — A big gap exists between what large companies now say is important and what they pay their chief executive officers to focus on.

Customers, employees and investors are pressing corporations to prove they are caring organizations with social value beyond higher stock prices. Even with stock markets near record highs, just 23 percent of people polled by Gallup in June had much confidence in big business.

Under that backdrop, the Business Roundtable, an organization of many of the nation’s top CEOs, made national news last month by redefining the primary purpose of corporations. After two decades of saying shareholders were paramount, the group declared that benefits for customers, employees, communities and suppliers were equally important. Nearly 200 CEOs signed the statement.

But company boards of directors currently tie the vast majority of CEO pay-for-performance to traditional financial metrics, with growth in stock value being king. Consider Coca-Cola. The beverage giant has for years highlighted its investments in communities. But that’s not what Coke’s board focuses on when it sets pay incentives for CEO James Quincey, who signed the Business Roundtable’s new statement.

And at Home Depot, little or none of CEO Craig Menear’s $11.4 million compensation last year was tied directly to metrics focused on the broader issues highlighted in the Business Roundtable’s statement.