Dr.  Hermann J.  Stern on Indexed Executive Compensation
Channel: Obermatt Executive Compensation
Date: 2016-01-19

Obermatt CEO Dr. Hermann J. Stern discusses important implementation milestones for indexed executive compensation. 

Stern says that indexed compensation is fairer for executives and fairer for shareholders compared to the traditionally negotiated compensation methods. This is because it rewards operating performance only - not the economy's ups and downs or irrational behavior of opportunistic traders. 

Indexed executive compensation is best used in volatile industries such as industrial conglomerates, transport, raw meterials and banking.

Indexed executive compensation measures performance relative to the market. This has the advantage that target negotiations become obsolete.

Indexed performance measurement requires less time for implementation and is valid for a longer period of time that negotiating target based compensation systems.