In light of the current economic downturn, managers’ and directors’ remuneration systems are a point of focus as they were established at a time of economic prosperity very different from the situation we are currently facing.
Because of the change in the economic cycle, we have salary packages linked to variable objectives which are impossible to meet in the current downturn.
Remuneration systems are not usually aligned with the companies’ business strategies. In fact, public opinion has pointed to their failure to adapt and lack of transparency as one of the main problems to be corrected during the present downturn
The challenge currently facing companies consists of redefining remuneration systems on the basis of their business strategy such that the following objectives are met: