If you are over 30 and have followed the NBA along the way, you probably remember one of the most colorful players of the game—Dennis Rodman. Green hair, difficult team player, a pattern of not showing up for games, Chicago Bulls NBA championship, and one of the most unusual incentive systems set up outside the C-suite….those are my memories. Rodman’s base was $4.5 million, with another $5.95 million (which he actually collected!) for completing each of the following: playing every game, leading the league in rebounding, having a 1.5 to 1 assist-to-turnover ratio, and hitting over 66% from the free-throw line. (Details from USA Today, Nov.26,1997, p.12).
Since we cover incentive systems in Ch.10, I am always looking for more current examples to use in class that will be of interest to our sports-oriented students–and I found one. ESPN.com just reported (Dec. 28, 2010) that NY Jets QB Mark Sanchez and Baltimore Ravens QB Joe Flacco stand to make millions in post-season contract incentives in early 2011.
Sanchez can pick up $1.875 million if he leads the Jets to a Super Bowl XLV victory on Feb.6 in Texas, and also lands the Lombardi Trophy. He gets $250,000 for every playoff win even if the final victory is elusive.
Flacco will be paid $200,000 per post-season win by the Ravens. This means a maximum of $800,000 for leading his team to the a Superbowl title.
One could question the need for such incentive systems in general. After all, they are already paid a small fortune to do their jobs. Maybe it only bothers me because my dean never gave out such bonuses in the B-school!