Deferred compensation in company stock does not work unless it is done in a way that strips out the ups & downs of the market. Otherwise in a general bull market a bad manager will most likely still win and in a bear market a good manager will lose.
A solution to this is to have deferred compensation modified to reflect "alpha" outperformance where the executive is both long his/her company's stock and short their competitors stock. The incentive is for the executives to outperform their peers and be penalized when they don't. This approach is also appropriate for general staff. There is nothing worse for general staff morale than to see their hard earned incentives evapourate during a bear market even though they are outperforming their competitors.
