Lest people think that we Fools are Pollyannas when it comes to executive pay, I'd like to make one thing clear: Good performance ought to come with substantial rewards.
Case in point is this morning's announcement by Procter & Gamble
Under Lafley's watch, P&G has gotten back to basics. It sold off its Crisco and Jif brands to J.M. Smucker
The market has reacted strongly to the revitalization of P&G's core brands. For example, its Crest Whitestrips have proven a runaway success. Meanwhile, Pampers and Tampax, which in the not-so-recent past were being eaten alive by Kimberly-Clark's
None of this is singularly due to Lafley's efforts, naturally. And our willingness to tolerate bonuses much greater than base salary is by no means infinite. However, Lafley has taken a company that had been set adrift by lack of focus and pulled on the bridle, hard. His shareholders have been rewarded substantially as a result, and the longer-term prospects for P&G look better than they have in years.
Bill Mann owns shares of Procter & Gamble and J.M. Smucker.