Incentives don’t make executives work harder. Ambition, and character do that. But they do help align executives – a whole team of individual executives – so that they make capital investment decisions and develop operational strategies which maximise shareholder value.
Just imagine. If you are an investor in an insurance company, do you want your executives chasing unprofitable premiums? If you are investor in a Global Brands company, do you want executives raiding the advertising budget to make their Christmas Bonus?
Let’s get executives and investors aligned.