Complex compensation schemes motivate executives to outperform peers

Executive compensation complexity improves ESG performance

Simpler executive compensation structures are associated with better financial and ESG performance

There is no correlation between compensation complexity and performance

Encouraging short-term sales growth

Avoiding any accounting cost for the firm

Motivating long-term value creation and retention 

Rewarding punctuality

It is based solely on individual performance

It does not require any performance condition

It is paid out immediately in cash

It provides long-term incentives by aligning manager interests with shareholders

A one-time cash payment often tied to short-term performance

A fixed annual salary increase

A mandatory profit-sharing scheme

A reward paid in company shares

Beneficiaries receive half the shares

No shares are delivered

The grant is delayed

The shares are taxed at a higher rate

3 years

2 years

6 months

1 year

The General Meeting of Shareholders 

The Compensation Committee

The Board of Directors without any other approval

The CEO