Question: Smooth talked into a bad bonus package during the hiring process

Six months back I moved cities to join as the CEO of the subsidiary, of a national professional services company.

During salary negotiations, a big part of my pay was made contingent to the operating profit of the company. The CEO/ HR of the parent company shared financial forecasts which have since proven to be completely unrealistic.

Bottomline, I think I was knowingly oversold during the hiring process. I am now underpaid, not because of bad performance... but because of unrealistic forecasts. Moreover, I did not have a way to do my due diligence at the time of my hiring.

What do you think is a good way for me to correct the situation?

8 Expert Insights

I get a sense that there's a certain amount of "right/wrong" thinking going on in the background--well, of course, you're human.  How could there not be?  The problem is going into charged dialog with an iota of wrong-making hardly ever works.  You might win this battle...but set yourself up to be at war with your boss.

There's already lots of stuff out there about finding ways to be "at choice" in situations where we feel victimized--fundamentally, that's what you need to find a way to do.  Fred Luskin's Forgive for Good is a good framework that's not much seen in the business world.  Or...find a way to take a "meta" position so that YOU haven't been wronged, but someone you care about has been, and the problem is not how to right a wrong, but how to make the best of the situation.  

Are the fundamentals of this company good enough that in the right circumstances you'd want to stay?  What would it take to play this as a game that created not only a good outcome for you, but for the company AND strengthened your relationship?  Work on the outcomes you want first--there some great tools that can help you step into a future in which that's already realized, and from which you'll be able to see solutions you can't see now when you're focused on problems.

Hmm.. Hardly enough information to provide any "realistic" feedback "to correct the situation." How would you define "correct the situation"? How big is the gap between what was represented/expected and what was/is true? What does your contract look like? Were you only shown forecasts or did you also see the historical financials? What do you mean by "I did not have a way to do my due diligence..."? How is the quality of your relationship with the CEO of the parent company?

To be brutally frank, it seems to me that you are not being fully accountable for your part in the situation (which does NOT mean what you've said isn't true - it's what is NOT said that raises the question). Did you act like a CEO in making the decision to take the job without doing your due diligence?

Your first step, IMO, is to get totally honest with yourself. Only then can you start to be effective in "correcting" the situation.

Given that the CEO and HR of the parent company did offer financial forecasts as part of the sales process, I think it is reasonable to go back to them and initiate a conversation.  My assumption is that, given the way you phrased "forecasts," that there was no sensitivity or range in their forecasts that would account for the dramatically lower "real" performance.  If that is the case, approach them, but don't approach them in an accusatory manner.  Rather explain your situation and that you are simply looking to be made "whole" based on what you were led to believe was within the realm of realistic performance.  Here's where the rubber hits the road.  If they are open to the conversation and want to work with you, it is a good sign you have supportive leadership and this could be a long road for you.  If, however, they say "tough luck," you likely need to start looking for an exit strategy.  There are few worse things for a company and the people that support it than an uncommitted CEO.  Don't do that to yourself or to others.  

And next time require that an outside third party perform an objective due diligence.  Good luck!

I'm assuming that your bonus is tied to the operating profit of the subsidiary that you were hired to manage as opposed to the parent company. If that's the case I would suggest opening up a dialog with the parent company CEO and HR manager to understand the assumptions behind the original forecast that you have found unrealistic now. Although you feel you were misled, your role as the subsidiary CEO is to handle this in a professional manner holding your emotions in check. Handled objectively with good rationale for your opinions, you might be able to renegotiate your compensation package. If you are still unhappy after taking an objective approach with the parent CEO and HR manager, you would be best served leaving the position as you will not be an effective CEO for that company.

What do I think is a good way for you to correct the situation? Get the company's financials back up to the level you thought they'd be...pronto.

How? By taking whatever you said you'd do to grow profitability in the 5-year-plan you likely prepared as part of the hiring process and rallying your company's employees to successfully implement those recommendations – plus whatever recommendations that they have that makes sense to you – all in the next 18 months. Ready? Set? Go!

Do you know that they believe that they "oversold" you? Do you believe that they "knew" that you could never make the forecasts they showed you? If they believe that you should have been able to make the forecasts, then you are probably not the only one who is disappointed right now and your bargaining position may not be very strong.

Presumably, you know what the variances are between the forecasts you were shown and your current performance and understand what those variances can be attributed to? What are the chances that you can point to the forecast, why it was overly optimistic, and why your negotiated package should be renegotiated so that you are paid more until your numbers improve?

In terms of "correcting" the situation, it would seem like the options are to improve your performance so that you are happy with your compensation, renegotiate your package, change your understanding of what happened and come to terms with your situation, or leave.

You could also continue on without changing anything, but I would guess that what seems like resentment might get in the way of your future success and happiness in this position.

The horse is already out of the barn.  You have two choices in my experience.  1. Have an honest heart to heart with the boss making suggestions on how to improve forecasting in the company.  Give her/him suggestions on how to tighten up the process and what role you can play.  Then move forward.  2.  The other alternative is to look for a new gig.

Get in there and do your best for the company. Make them money, then negotiate more money for yourself. You cannot turn back the hands of time, but you can change what happens going forward.