Australian companies are investing significantly in executive remuneration – but research suggests many of those packages aren’t delivering their intended value due to a gap in perceptions about what the packages are worth.

Research is showing employers are spending significantly more on executive offers than the value the executives themselves believe they are receiving, highlighting an untapped need for better communication around remuneration structures.

This gap, which the research suggests has widened in recent years, is being driven by perceived complexity in long-term incentive (LTI) structures. This in turn risks turning incentives to disincentives, derailing firms’ long-term growth strategies.

“A poorly negotiated management reward plan can insufficiently motivate the CEO and management team or, worse, misalign the interests of management and the investor, affecting performance over time,” PwC Australia said in a recent paper.¹

Only 17% of equity plan participants in PE portfolio companies found their plan easy to follow, this report found, signalling that complexity and ambiguity in remuneration and benefit packages are now directly eroding incentive value.

The separate PwC Executive Remuneration Trends report²  found similar trends in the listed sector, with median LTI vesting outcomes for ASX100 companies falling to 63% in FY24 (from 72%), and full vesting dropping to 22% (from 27%) – raising the question whether a lack of innovation in remuneration structures is putting Australian companies at risk of losing global talent, rather than seizing growth opportunities available. As the PwC report puts it, “Could this homogenisation be stifling innovation and therefore potential value creation?”.

Providing a front-line view on this issue was research by corporate governance provider Glass Lewis, which in August 2024 pointed to a growing preference among Australian executives for short-term incentives over hard-to-value LTI structures.³

“The imbalance between STI and LTI presents key concerns for long-term orientated investors as it risks fostering an excessive focus on annual STI scorecard assessments, leading to short-term decision making,” Glass Lewis said.

While companies can invest considerable time and money in designing remuneration and benefit packages, this means little if executives cannot understand them, feel they are opaque, or struggle to untangle the performance metrics.

At Shadforth, our ‘Executive Wealth Service’ (EWS) addresses this directly – an employer-funded program that helps C-suites and leadership teams understand the real value of their remuneration and incentive packages.  For organisations, it’s an opportunity to ensure their investment in package design delivers it’s intended purpose - attracting and retaining top talent and reducing the disruption costs of unwanted turnover. For the executives, it fulfils an unmet need for clarity, context and communication around their incentive structures – an executive who understands what they hold is more engaged, more settled, and less likely to be swayed by an outside approach.

How does it work? Following a discovery session, advisers provide information on how each executive’s equity schemes and incentive structures operate, and provide some modelling on how their remuneration may evolve.  Executives then receive a personalised wealth report, about core wealth, variable remuneration, investment strategy, budget and cashflow, debt management, superannuation, ownership structure insurance and estate planning.

“Australian executives build most of their wealth via company-sponsored remuneration and benefit plans,” says Terry Dillon, CEO of Shadforth Financial, which recently launched its own comprehensive executive wealth service.

“But what these remuneration packages often don’t provide is the clarity executives feel they need to make informed decisions about their futures.”

“For the organisations we work with, we often see a shift over time – executives who better understand what they hold are feel more engaged, more settled and less likely to be swayed by an outside approach. The remuneration investment starts working the way it was designed to.”

References

¹ ‘More than Management Equity Plans’, PwC Australia, March 2026. Available at https://www.pwc.com.au/management-equity-plans.pdf
² ‘2024 Executive Remuneration Trends: Innovation Inertia - Is It Time for Change?', PwC Australia, December 2025. Available at https://www.pwc.com.au/insights/2024-executive-remuneration-trends.pdf
³ ‘What's Undermining the LTI? Insights from the Australian Market’, Glass Lewis, August 2024.  Available at glasslewis.com/article/whats-undermining-the-lti-insights-from-the-australian-market