Pay-for-Performance for CEOs and Teachers
Oracle CEO Larry Ellison earns $37,692 an hour. No, that is not a typo or misplaced comma. Ellison’ annual salary ran $78.4 million, much of it in stock option awards. His salary was based on the annual performance of the company’s stock. Oracle’s Board of Directors set the pay scale (Ellison owns one-fourth of the company’s shares) to spur better management to increase profits and shareholders’ dividends.
They pay Ellison to perform well on the metric they have chosen (“company earnings before income taxes minus the costs of stock-based compensation, acquisitions, restructuring, and other items.” This CEO’s performance pay is not, however, a metric used by other major corporations for paying their top person. I return to the point of different measures used by companies to judge CEO performance later.
Switch now to the average U.S. public school teacher who earns an annual salary of over $55,000. That figure translates to around $27.00 for a 40-hour week. Like Ellison, hundreds of thousands of teachers are involved in pay-for-performance plans. In response to the federal Race To the Top competition, many states have mandated that teachers’ performance and salary be tied to students’ test scores to spur better teaching and student learning. Those test scores, as a factor in assessing effectiveness and determining salary (or Pay-for-Performance for CEOs and Teachers | Larry Cuban on School Reform and Classroom Practice: