“Is executive remuneration fit for the future? Is it fit for a future in which we want a different economy and strive to achieve the sustainable development goals? These are questions I asked myself during my career at several multinationals”, says Frederic Barge, says Frederic Barge in this monthly HRRG network call with Hein Knaapen, executive director of the Executive Network and managing partner of CEO.works in Europe.
“Then I started my initial research and found out three things on this topic, which can be described as the good, the bad and the ugly. The good is that incentives do work, people react to them. And if you tailor the incentives in a different way, you could actually steer executives to regenerate social outcomes. The bad is defining the optimal behaviour, which is a very difficult topic, also to enforce compliance. Should it be a conversation between the company and his stakeholders? Or do we need to take shareholders into account as well? And for the ugly: even well-established incentives can have bad side-effects and leave space for performance metric manipulation and therefore break the link between pay and performance. If you take all of this into account, obviously you would like to repair the bad and the ugly.”
Reward Value works on seven projects to find ways to repair this system of executive remuneration. Want to learn more? Please watch the webcast below or read more about our projects.