How is firm performance related to executive compensation goals? Using a large dataset of performance goals employed in incentive contracts we study this question. A disproportionately large number of firms exceed their goals by a small margin as compared to the number that fall short of the goal by a small margin. This asymmetry is particularly acute when compensation is contingent on a single goal or if there is a discontinuous jump in compensation earned for meeting the goal. Firms that just exceed their EPS goals have higher abnormal accruals as compared to firms that just miss their EPS goals. Firms that just exceed profit goals have lower R&D and SG&A expenditures, and experience lower long-run stock returns as compared to firms that just miss their profit goals. Overall our results highlight some unintended costs of linking executive compensation to specific performance goals. Joint with Benjamin Bennett, Carr Bettis, Radhakrishnan Gopalan, and Todd Milbourn