Golden Parachutes and Employee Eye Rolls

Walking the tightrope between fairness and fallout

The Forbes piece on CEO compensation skyrocketing over 1,000% since 1978 hits a nerve, doesn’t it? It’s a tricky subject. As a CEO, you undeniably carry huge responsibilities, but when pay packages feel wildly out of sync with company performance—or come with too many over-the-top perks—it can send the wrong message to your employees and shareholders alike.

I often advise CEOs that any perks beyond what a “normal” employee gets need to be heavily scrutinized. Reserved parking spots, company-paid vacations for the family—these might seem harmless to you, but they can give the impression that the CEO is prioritizing personal reward over the company’s success. In The CEO Tightrope, I refer to one failure mode of the chief executive as the “playboy king”—the type of CEO who spends most of their time enjoying the pay, prestige, and amenities of the position. Though this does not describe most CEOs I know, not by a long shot, when it happens it does not inspire trust. And let’s face it: you’re in the trust-building business.

Yes, changes in tax policy can make this issue more complicated: Government-implemented caps on CEO salaries have, ironically, shifted the bulk of CEO compensation to stocks and other incentives, which has driven the disparities in pay for CEOs and non-CEO employees.

However, most of your employees have no idea what those policies mean or why they matter. For them, it’s about perception—and your job is to eliminate doubt and frustration from your most prized asset: your people.

Keep It Simple, Straightforward, and Sane

CEO pay should be tied to real, measurable outcomes—the kind that can be directly correlated to increasing value for employees, shareholders, and customers. Plus, compensation should reflect the CEO’s ability to deliver results aligned with the company’s documented goals. Sounds straightforward, right? Elon Musk agrees: “Beware any company where leadership compensation is not linked to performance," he said last year.

Here’s the catch: Most CEOs struggle to clarify those goals and metrics upfront—and across the entire company. Ask yourself this: Could your frontline employees explain to their grandmothers what success looks like for your company at the end of the quarter? Probably not. But they should be able to. Clear metrics and accountability are the flip side of the coin from trust, and this applies to every level of the business, not just the C-suite.

Long-term incentives play a big role here too. Instead of focusing on short-term wins, tying compensation to sustained growth, stock performance, or other long-term outcomes keeps a CEO aligned with shareholder interests and focused on sustainable success. This approach should be market-driven and modeled against direct competitors, not broad U.S. or global market conditions.

You Live in a Glass House

If employees feel like you’re not being transparent, expect some rocks to fly.