Obermatt delivers the Bonus Index results to its customers on a quarterly basis to set the variable component of executive compensation that is based on financial performance. The component based on personal performance remains unaffected. 

The advantage for publicly-listed companies is that the level of the variable executive compensation coincides with the Obermatt Bonus Index used by shareholder proxy advisory groups (e.g., DSW, Manifest, see also Obermatt Bonus Index current results). 

The advantage for privately-held companies and family firms is that the Bonus Index is independent, cost-efficient and determined by a specialized financial research company specifically for compensation purposes (more about Obermatt).

Companies implementing the Obermatt Bonus Index benefit from a compensation model that is fair for executives and fair for shareholders. Furthermore, the practical benefits include:

1. Results can be obtained quarterly so that executives know where they stand and accounting can make any necessary accruals.
2. The selection of the relevant financial metric is tailored to the organisation. 
3. The definition of the peer universe is based on mutual understanding and agreement.

Last but not least, the Bonus Index encourages companies to look outwards to the markets. It is more motivational to beat the competition rather than the budget. This is simpler to communicate: the more you beat the competition, the higher your bonus (see methodology).

How Obermatt implements the Bonus Index for customers

The following steps are necessary for implementing the Obermatt Bonus Index:

1. Determine the Peer Universe
2. Define performance measurement and accounting pro forma adjustments
3. Calibrate the bonus plan
4. Formulate and approve the proposed bonus levels
5. Adjust compensation regulations and train executive management

Afterwards, Obermatt delivers financial metrics of peer companies on a quarterly basis and calculates the Bonus Index values for the client and its respective divisions. 

For publicly-listed companies, the Obermatt Bonus Index values reflect the internally implemented values so that executive committees, boards of directors and shareholders draw on the same financial performance measurements.

How your Bonus Index would look

As a basis for a first discussion, Obermatt completes a complimentary calculation of your Bonus Index using a draft custom peer universe for the past five to ten years. Use our contact form to set a time for an appointment.