Has Pay for Performance Gone Awry? Views from a Corporate Governance Forum

July 2001
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In order to maximize investment performance, some institutional investment managers, such as TIAA, continually monitor the performance and policies of the companies in which they invest. A key governance issue at many public companies is compensation policy: the system of incentives and rewards that corporations use to encourage employees to act in shareholders' interests. This issue of Research Dialogue summarizes the discussions at a recent TIAA Institute forum on compensation policies at public corporations. The article provides important background information on compensation issues, demonstrates the need for a judicious and informed approach in the design and implementation of compensation programs, and highlights the consensus on several issues that arose at the forum.