Obermatt Bonus Index


Would you like executive pay that is universally accepted?

Then you are right with using the Obermatt Bonus Index, as the Bonus Index ends the bonus debates. How is this possible? Very simple: The payments are stable, everything is transparent and the payment levels confirm to expectations.

Executives want stable compensation that is in line with the market. Investors want performance transparency. The Obermatt Bonus Index delivers both. Simple and reliable. Watch the Bonus Trilogy to see how you can increase acceptancy for your compensation system or read about the Bonus Index benefits.

 

The Obermatt Bonus Index assesses performance based on the rank method of indexed performance measurement. The higher the rank of the company relative to its peers, the higher the compensation. As simple as that. Period. And on average, executives receive 100% of market typical pay - not more and not less.


Motivate for Growth

The Financial Times columnist Andrew Smithers in London proposes that companies with executive incentives that focus on profits save much too extensively, thereby blocking future growth. This is understandable because - in the short run - profit is easier increased by reducing costs than by increasing sales or investing in new business. As a result, profit sharing programs achieve exactly the opposite of the desired outcome, namely reducing rather than increasing profits.

In contrast, the Obermatt Bonus Index motivates for growth because growth is build into the core design of the Bonus Index incentive system.


Understanding the Bonus Index

Obermatt CEO Dr. Hermann J. Stern explains in this article the concept of the Bonus Index in detail. The paper shows how indexing performance neutralizes distortions from economic cycles and other external factors in performance measurement, making executive bonus payments stable despite fat tail distributions in financial metrics. The author believes that independent indexing, such as the Obermatt Bonus Index, ends of the current bonus debates because executives receive stable, market typical compensation which are entirely transparent to shareholders. Download the Article from SSRN