Few managers get bonuses for reaching long-term business goals

Prague, Feb 26 (CTK) - Over three fifths of managers of companies in the Czech Republic have fixed bonuses and remuneration of more than a half of them depends on business results of companies, according to a study of Deloitte Corporate Governance Centre.

However, it is alarming that only a quarter of companies remunerates their managers in harmony with reaching long-term goals in a horizon longer than ten years, the study says.

"While in western Europe 40 percent of companies had bonuses for manager for meeting long-term targets still before the onset of the crisis when the risks companies faced were not so high, the trend did not penetrate the Czech Republic even at the crisis time," said the centre's head Jan Spacil.

Remuneration of managers in harmony with long-term interests of companies represents one of the basic principles of good management of companies. Managers then can get their bonuses or part of them only after a longer time when the results of their decision-making, targeting and management can be fully seen.

If the board of directors of a company is remunerated according to short-term results, the board logically shifts more to the area of operations management or tries to achieve immediate effects by measures that may be unsuitable in the long term. Tendencies of taking unsubstantiated high risk may thus appear, Czech Institute of Directors president Kamil Cermak warned.