Despite all of the current criticisms of corporate executive pay, some companies do pay for success, according to The Corporate Library.

"There are CEOs out there who get paid for success and who have compensation committees that actually do what most boards claim they are doing—set pay responsibly, set challenging performance targets, and provide the CEO with the same benefits that the whole workforce is getting," TCL Senior Research Associate Paul Hodgson writes in a December 2009 report.

The report identifies a dozen "Pay for Success" companies where it says the link between CEO pay and company performance "appears both strong and justifiable."

"While these CEOs were pretty well paid, no one has an issue with that, certainly not shareholders, because they earned it," Hodgson tells Compliance Week.

To make the cut this year, companies had to be S&P 500 or Fortune 500 companies that outperformed their industry peers and the S&P 500, and that had a TCL governance rating of moderate to low risk, a TCL CEO compensation rating showing moderate or low concern, total stockholder return over five years of more than 50 percent, and total CEO compensation of less than $30 million over the last two years. For calculating TSR, a uniform measurement period of the 60 months ending June 30, 2009, was used, regardless of fiscal year ends.

Five of the companies have been featured in prior Pay for Success reports: Apple, AutoZone, Darden Restaurants, Humana, and Nucor Corp.

"There is no one-size-fits-all compensation policy here," Hodgson writes. "Among all the companies the only commonalities are simplicity and moderation."

However, the report cites some elements that were common at more than one company:

• Incentives not paid for below-median performance;

• Challenging performance targets;

• Fewer stock options and restricted stock and more performance-related equity awards;

• Use of value growth measures (many companies use cost of capital and/or return on capital measures);

• Long-term incentives that aren't based on simple stock price measures;

• Generally low levels of perks and moderate employee benefits and

• Few employment agreements and consequently little or no severance benefits.

The report notes that many of the companies approached executive pay much as they approached the pay of other managers and professionals at the company, setting salary ranges, using company-wide bonus plans, etc. In addition, while most of the companies used pay surveys, few used compensation consultants.

The full report is available for purchase from The Corporate Library.