Reward Value is a non-profit research initiative established by Frederic Barge. Reward Value believes that current executive compensation practices no longer fit the societal context in which companies operate. Reward Value aims to – in cooperation with all stakeholders – contribute to a much-needed redesign of executive compensation practices.
Executive remuneration has been a topic of hot debate for many years already. Academic research has shown several issues addressing the growing concerns with the developments of executive pay. In the public domain, also triggered by corporate scandals over the years, the discussion on executive remuneration has mainly been driven by emotions. With the widely embraced understanding for the need of a regenerative and distributive economy in support of a safe, healthy and sustainable planet and society, more and more companies are expressing their contributory role in well phrased purpose statements. The purpose statements are further detailed in the strategies of firms, but often it becomes less dominant in the performance measurement and evaluation, and even less visible in the design and execution of executive remuneration policies. For Reward Value, responsible remuneration is the key to the responsible economy. It is not the sole driver, but it is a catalyst. Executive behaviour is driven by intrinsic and extrinsic motivation. Intrinsic motivation is driven by personal conviction and culture. The nomination committees of boards need to ensure the right selection of leaders in support of the corporate culture. The extrinsic motivation is mainly structured by incentives. If executives are paid for (mainly) short-term financial performance, long-term sustainable value creation for stakeholders, including shareholders, can be negatively affected. The alignment of purpose, performance and pay is therefore a key contributor to the change for good.
The Reward Value Foundation, as a non-profit research organization, is seeking to fill this gap. Establishing Principles of responsible remuneration, which are to be globally accredited, accompanied by remuneration models in accordance with those principles, will support the change to a sustainable and circular economy. In using a solid academic foundation, the discussion on executive pay is structured on facts rather than on emotions. This will allow firms, organisations, and regulators to establish the necessary changes towards fair and equitable remuneration aligned to long-term sustainable value creation in contribution to a safe, healthy, and sustainable planet and society.
Reward Value’s approach
More effective executive remuneration policies lead to better outcomes for shareholders and other stakeholders (such as employees, customers, and society at large). The need for change is clear; the road to the required change, however, is to be developed.
Following the initial academic research and building on historical data on remuneration and financial and non-financial performance, both short term and long term, the effectiveness of recommendations will be tested and validated research done in cooperation with SEO Amsterdam Economics and international business schools and universities.
Next to research, Reward Value will work closely with institutional investors and other key stakeholders to discuss and develop recommendations and agree upon vital next steps toward the implementation of the required change. Reward Value facilitates this process and acts as an intermediary between the different stakeholders.