Executive remuneration packages: Getting it right

Ifty Nasir, CEO and Founder of Vestd, examines executive compensation packages to ensure that executives act in the best interests of the company and its shareholders

A key part of executive hiring is remuneration packages. While these sound straightforward enough in practice, getting them right is proving to be problematic: shareholder dissent over C-suite pay is on the rise, with three times as many companies facing opposition from more than 20% of their shareholders in 2025 compared to the previous year.

Boards now have to strike a difficult balance: creating a deal ‘sweet’ enough to attract executives in a talent war, but not so unrealistic that it doesn’t hold up under shareholder scrutiny.

The retention challenge

Executives typically shoulder the highest responsibilities – from large budgets and senior management teams to wider campaigns and long-term business strategy.

This responsibility, combined with the role’s complexity and required experience, means the candidate pool is usually quite slim. It’s especially a problem in niche, fast-growing sectors like artificial intelligence, where there simply aren’t enough knowledgeable candidates to meet demand. As a result, the cost of replacement is high, and finding the right leader is becoming increasingly challenging.

Interestingly, data shows that retention across the C-suite isn’t the same for every role, with turnover appearing especially high in roles tied to customer service, digital transformation, and workforce responsibilities. Chief Marketing Officers (CMOs) are the most transient, with an average tenure of just three years and six months, closely followed by Chief People Officers (CPOs), while CEOs remain the longest-serving executives at six years and two months.

What does a ‘good’ remuneration package look like?

To ensure the business maintains a clear direction and growth, keeping the right executives in place is critical – and remuneration packages are a crucial element. So, how do you go about building one that works?

Salary is probably the most important thing for any applicant – whether entry-level or exec. But wage compression and the demand for pay transparency mean that at the top, salary growth has remained almost stagnant. Data shows that executive pay increases have remained restrained at around 1.5% a year over the last decade.

There’s also more onus on companies to provide information on how they calculate executive salaries. In its ‘2026 executive pay guidelines’, trade body The Investment Association says that firms need to be able to explain why that decision has been made, why it’s right for the business strategy, and how it will impact its future success. Reasonings must also be ‘company-specific’; boilerplate phrases like ‘to stay competitive’ are now being rejected.

While salary remains important, firms should ensure they are looking at the remuneration package as a whole if they’re to stay competitive. Financial benefits like sign-on bonuses, equity, and wealth management services are all welcome, but retention isn’t just about the bank account. Including perks like private healthcare, life insurance, health club access, and flexible work sprints helps provide autonomy and well-being and prevents executives from leaving during rocky periods.

Aligning rewards with reality

The intention behind remuneration packages is to ensure that executives work in the best interests of the business and its shareholders – but this doesn’t always happen.

In reality, compensation packages can become disconnected from the company’s real performance. If targets change but compensation doesn’t, executives can end up being rewarded for hitting goals that are no longer relevant. And when things are going reasonably well, there can be a temptation to take a back seat rather than actively continue growing the business.

In these scenarios, it can be useful to tie benefits directly towards performance and goals.

A good example of how this might look in practice is with growth shares. While regular stock options can help to provide rewards in the short-term, growth shares offer more of a sustainable incentive.

Here, holders benefit from the value they create above a specific threshold – providing a more rigid link between business performance and employee rewards. And because their value is based on new business growth, they don’t dilute existing shares in the same way that regular equity would, helping to reduce shareholder objections.

Another option is to shorten goal timelines. Rather than one big 12-month goal, consider breaking objectives down quarter-by-quarter. This allows the board to recalibrate targets if a ‘black swan’ event happens that makes the objective impossible or irrelevant, maintaining employee motivation and ensuring that the executive can still be rewarded for good work even if the goalpost is no longer achievable.

Benefits beyond the boardroom

It’s often when hiring for more senior roles that we look more closely at the remuneration package. But smart firms are realising that the same businesses that could be used to attract a CFO could bolster company performance if rolled out more widely.

Offering additional work-from-home days and perks like health insurance can help reduce absenteeism by providing employees with medical help more quickly. Not only does that help to drive a more supportive culture across the business, but it also protects productive hours that would otherwise be lost to sickness.

Switching to a hybrid or remote working model can actually return money to the business through reduced overheads and operating costs – as well as offering a key benefit talent is looking for in 2026. And rolling out equity across key employees beyond the executive level can help to bolster employee morale, retention and productivity.

Getting remuneration packages right in 2026 means stepping away from a bidding war and towards a value-led approach. The winners will be those who successfully balance shareholder expectations with ‘hard-to-leave’ incentives that prioritise long-term growth over short-term wins.