Outperform

“Cycles, currencies, market tides. Much of what we call performance is just the weather.”

Measured in absolute terms, there is almost no correlation between what executives are paid and how their companies perform. What companies really pay for is retention. Absolute numbers mislead because so much of any result is just weather: the economic cycles, currency swings, and industry tides that lift or sink every company alike. A record year on a rising market is not the same as a well-run company, yet boards reward both as if they were. Outperform takes apart every conventional measure of performance, then offers the alternative: index operating performance against a live field of peers, the way the Olympics ranks athletes against the field rather than the clock. Strip out the weather, and a board can finally see, and pay for, real performance. The method has a name, the Indexing Operating Performance Method, and it is in use at leading companies.