Executive leadership is dedicated to fostering an action-oriented culture aimed at delivering results. Therefore emphasizes should be placed on variable pay and long-term value creation in order to create and maintain a strong alignment with a company’s annual financial performance goals and long-term value creation strategy.
Executive Pay Mix Ratio
The pie chart represents the pay mix for executives. As a general rule, variable pay should be higher than fix pay.
Executive pay should achieve the following:
Executive Pay Design
In designing an executive pay, emphasize is on variable pay and long-term value creation strategy. Executive remuneration mix consists of three main elements:
1. Paying Competitively
This is achieved through benchmark against a peer group consisting of companies with whom a company competes for talent.
2. Differentiating by experience and responsibility
This is achieved through alignment with the responsibilities, relevant experience, required competence and performance of individual jobholders.
Target pay aims at 40% of base pay and 60% in variable pay in order to maintain a strong alignment with a company’s annual financial performance goals and long-term value creation strategy.