Maybe the CEO's pay should based on a percentage of the company's profits. If the company losses money, the CEO gets no pay at all. That would be a big incentive for the CEO to do a good job.

Pay based on performance is pretty much what we do now at the executive level and part of the problem. An executive is in the position to make decisions which maximize short term gain... like making lots of bad loans or insuring lots of shady deals. In the short term profits go up, but in the long term the decisions have doomed the company. How many quarters do you need to have stellar profits before you are set for life? 3 or 4 quarters of better than expected earnings? It would be much better to come up with a way for executive compensation to be tied to the LONG TERM success of the company so that executives have an incentive to make better long term decisions. Maybe some portion of the compensation is paid out over 20 years and tied to company performance over those 20 years. This would provide an incentive for executives to develop strong leadership within their companies, develop talent, and make decisions that will create a strong company today and 5, 10, 20 years from now.

I understand the motivation here.

In the US this would violate expo-facto protections in the constitution.

Going forward... adding a surtax for large, non-salary payments would be popular. Maybe the tax could be avoided if the bonus is merely the opportunity to purchase corporate stock at the price of when they took the job. If the stock price went way up then maybe they did contribute something significant.