Trump Bans ‘Short Term Metrics,’ Floats $5 Million Pay Cap for Defense Execs—Agenda

Executive orders many be coming for CEO pay. Robin Ferracone, CEO of Farient Advisors, emphasized in Agenda that boards should move quickly following a new executive order from the Donald Trump administration targeting executive compensation practices at defense contractors. She advised directors to inventory existing government contracts, assess performance against contractual obligations, and review current share buyback and dividend policies. Ferracone also highlighted the need for boards and management teams to prepare negotiating strategies with federal agencies as enforcement details continue to take shape.

“This is likely to be a clear wake-up call to other public companies that work with the government.”

R.J. Bannister, COO of Farient Advisors, weighed in on the order’s broader implications. The directive bans the use of short-term financial metrics such as free cash flow and earnings per share in executive incentive plans and signals potential caps on executive pay at underperforming defense contractors. Instead, the order pushes companies to tie executive compensation to operational performance, including on-time delivery, production speed, and increased capacity—marking a sharp departure from how most executive pay programs in the sector are currently designed.

Bannister noted that if the administration succeeds in reshaping compensation practices tied to government contracts, similar approaches could extend to other industries that rely heavily on federal business, including pharmaceuticals, healthcare, insurance, and commercial services.

While the legal framework and enforcement mechanisms remain unclear, both Ferracone and Bannister underscored that boards—inside and outside the defense sector—should closely monitor how this policy unfolds. Even without immediate enforcement, the order signals a broader shift in how the federal government may expect executive pay to align with delivery, execution, and long-term operational outcomes.

Read the full story in Agenda.

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About Robin A. Ferracone

Founder and CEO, Farient Advisors/GECN Group

New York: (646) 626-6931
Los Angeles: (626) 799-2700
robin.ferracone@farient.com

Robin Ferracone is founder and Chief Executive Officer of Farient Advisors LLC, an executive compensation, performance, and corporate governance advisory firm. Farient helps clients make performance-enhancing and defensible decisions in the best interests of their shareholders and other stakeholders. Robin provides these advisory services to public and private companies.

From 2005 to 2007, Robin was President of the Human Capital business of Mercer, a business that included talent and compensation consulting, software, and data services globally. Prior to that, Robin was Chairman of the U.S. West Region for Mercer’s parent company, Marsh & McLennan Companies; market leader and Worldwide Partner at Mercer; and President and Chairman of SCA Consulting, a firm she co-founded and sold to Mercer.

With over 30 years of consulting experience, Robin advises clients in the areas of business and talent strategies, executive compensation, organization, value management, and performance measurement. She is the author of the book entitled, “Fair Pay Fair Play: Aligning Executive Performance and Pay.” Her work focuses on providing high-impact decision-making support and organizational solutions based on strategic and market insights. In addition, Robin has authored numerous articles, is a regular contributor to Forbes.com and Directorship Magazine, and often is quoted in national publications. She is a frequent speaker for prominent organizations, such as the Council of Institutional Investors, Society for Corporate Secretaries and Governance Professionals, NACD, and The Conference Board.

Robin is currently on the Board of Directors of The Woodlands Financial Group (TWFG) where she serves as chair of the Compensation Committee. She also serves on the Board of WildAid, a global non-profit dedicated to protecting endangered species and reducing climate impacts. Robin is a trustee emeritus of Duke University. In addition, Robin is a member of 50/50 Women on Boards, the National Association of Corporate Directors, Women Corporate Directors, YPO Gold, and the Trusteeship. She formerly served on the Board of Trupanion, Inc., where she chaired the Compensation Committee. Of special significance, Robin has been named to the NACD Directorship 100, a list of the most influential people in corporate governance and the boardroom, an unprecedented 14 times. And, in 2014, she was selected as one of EY’s Entrepreneurial Winning Women, a competition that annually recognizes female entrepreneurs.

Robin received an MBA from the Harvard Business School, where she graduated with high distinction, and a BA summa cum laude in management science and economics from Duke University, where she was elected to Phi Beta Kappa.

 

About R.J. Bannister

Partner, COO, Farient Advisors/GECN Group, New York

New York: (646) 626-6929
Mobile: (917) 747-3985
rj.bannister@farient.com

R.J. has 30-plus years of experience consulting to the S&P 1500 and large private companies representing the board’s compensation committee or management, and sometimes both parties. R.J. has worked with hundreds of companies on their total rewards strategy and executive compensation philosophy to align pay programs with business strategy. His ability to create alignment results from deep insights on industry and compensation trends; sophisticated financial, market, and compensation analytics; and impactful, easy-to-implement solutions. He has worked in nearly every industry sector and extensively with private equity companies. Before joining Farient, R.J. was the founder and CEO of Bannister Group LLC, an executive compensation and total rewards consultancy he founded in 2019 after retiring as a managing director from Willis Towers Watson. R.J. holds an MSc in economics from the London School of Economics and a BS in economics from the University of Pennsylvania’s Wharton School with a triple concentration in corporate finance, strategic management, and international political science.

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