Performance-based compensation is a growing trend among compensation procedures. It is currently being acted upon as "pay for play" theories where compensation accounts for the attainment of one or more performance goals within the company. These performance goals are established by a compensation committee consisting solely of two or more outside directors (not a current or former employee or officer of the corporation,and does not recieve compensation for personal services other than for directorship). The material terms under which the compensation is to be paid, including the performance goals, are then disclosed to and approved by the shareholders in a separate vote prior to the payment. The committee verifies that the performance goals and any other material terms have been successfully met and completed in order for the executive to receive the full compensation.

Performance is based on standards for the individual executive, for a particular branch, or for the company as a whole. Performance standards could include increases in stock price, market share, quarter or annual sales, or earnings per share. Please note that executives are allowed some discretion in their performance-related compensations; as well, their performance may be reevaltuated based on preestablished objective goals and performance formulas.