Akamai Technologies (Nasdaq: AKAM) isn't anything like Abercrombie & Fitch (NYSE: ANF).
I know this not because Akamai specializes in Web content delivery while Abercrombie is a teen retailer, though both descriptions are accurate. The biggest difference here is that, while Akamai is paying managers to perform, Abercrombie CEO Mike Jeffries last year collected a massive "retention bonus." He earned millions just for showing up.
Paid to perform
Akamai's board knows this won't fly with investors. On Jan. 20, it approved and filed a new compensation plan that cuts the amount of equity compensation available to management while increasing cash salaries for the executive team, The Boston Business Journal reports.
The board is also recognizing CEO Paul Sagan with a $50,000 cash bonus for his contributions to the company's 2009 financial performance and Akamai's overall success in light of "a challenging economic environment."
Matching pay to performance is an extremely Foolish move. It reflects an understanding that, as investors, we're as turned off by Google's (Nasdaq: GOOG) options bailout as we are the "golden parachutes" given to former executives at Citigroup (NYSE: C) and Bank of America's (NYSE: BAC) Merrill Lynch unit.
Sagan's bonus is also well-deserved. Akamai has never seen more, and more legitimate, competition from the likes of Amazon.com (Nasdaq: AMZN) and Limelight Networks (Nasdaq: LLNW). And yet, through Q3, the company was resurgent.
Yeah, but ...
To be fair, it's possible that these disclosures -- the lower equity awards, the relatively small bonus for Sagan -- augur poorly for Akamai's fourth-quarter results, which we'll get Wednesday after the closing bell. I don't much care. So long as Akamai is looking long-term, and working to match pay to performance, I'll remain a happy shareholder.
© 2010 UCLICK L.L.C.