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Today, executive pay packages are more likely to be based on comparative

performance. This new pay design has five underlying principles:
1. Compensation committees made up of stockholders and company directors link
CEOs pay to returns to shareholders.
2. Variable performance-based pay is emphasized over guarantees.
3. CEOs are encouraged to invest in company stock.
4. Performance yardsticks are linked to actual key productivity indices, to
the competition, or to both.
5. CEOs are held responsible for the cost of capital; this forces them to look
for vehicles of growth rather than just amass personal wealth.