The best way for CEOs to retain bonuses in a downturn: Reduce expectations

• In today’s CEO Daily: How chief executives are safeguarding their compensation by lowering their objectives
• The significant leadership narrative: Whether Meta’s reported 20% job cuts will spur a new wave of workforce reductions
• The markets: A substantial rebound in Asia
• Additionally: All the news and watercooler discussions from .

(SeaPRwire) –   Good morning. You could call it the Hall of Blame. A long-standing practice in the business world is to claim credit for successes, attribute disappointing outcomes to external factors, and lower the bar during challenging periods to ensure one can meet it, thereby preserving their compensation package.

When Apple established performance targets for CEO Tim Cook and his executive team for fiscal year 2025 last year, the board set goals at or below the previous year’s results, citing “trade policy” and an “uncertain macroeconomic outlook.” As my colleague Amanda Gerut notes, this effectively guaranteed that Cook would receive a $12 million bonus, regardless of his performance. (Apple comfortably exceeded the modest targets.)

Given the volatile markets, rising oil prices, ongoing conflicts, and concerns about a global recession, it’s important to monitor compensation packages. Here’s what I’ll be observing:

Lowered targets—In an analysis of 50 public companies released on Friday by Compensation Advisory Partners (CAP), researchers found that boards set reduced targets, broader performance ranges, and flatter payout structures to protect CEO pay last year. The outcome: compensation increased by 8% and bonuses rose by 4% within this group, while revenue saw only a slight increase and earnings declined. CEOs received 87% of their target bonuses, an increase from 77% in 2024.

Self-effacing rhetoric—While good times are framed as personal achievements, bad times are presented as collective experiences. When taxpayers bailed out major banks during the 2008 financial crisis, some described it as privatizing profits while socializing losses. However, in difficult periods, few hesitate to seek government assistance. If a company isn’t “too big to fail,” it might be deemed mission-critical, a social benefit, or a bulwark against geopolitical rivals. High-flying executives can become ordinary individuals buffeted by adverse circumstances.

Blame—Dexin Zhou of Emory University published a compelling study in 2014 titled “The Blame Game,” where he analyzed 70,000 earnings call transcripts to identify leaders who attributed poor performance to economic or industry-specific factors. Those who blamed external factors and diverted attention from themselves were less likely to be terminated than those who took personal responsibility for the results. When times are tough, it appears, the repercussions don’t begin at the top.

Contact CEO Daily via Diane Brady at diane.brady@.com