From Traditional Bonuses towards Sustainable Bonuses

Executive Compensation > Forum > From Traditional Bonuses towards Sustainable Bonuses

From Traditional Bonuses towards Sustainable Bonuses
Anneke Zwart, Student (University), Netherlands, Moderator
Traditional Bonuses
A common way to reward employees and especially executives for outstanding performance and the achievements of set standards/targets has been the use of bonuses. These bonuses were supposed to increase efficiency and thereby performance.
However, it is now increasingly recognized that many of these bonuses are not beneficial at all. Rather, they only stimulate excessive risk-taking and short-term egoistic business behavior that does not take into account long-term environmental and societal objectives. Bonuses often lead to prioritizing shareholders at the costs of stakeholders, which triggers irresponsible behavior and leads to governance failures.

Sustainable Bonuses
The negative side of bonuses became apparent especially during the global financial crisis that started in 2008. It is now recognized that a broader perspective on bonuses need to be taken: bonuses that do not only take into account the shareholder...Sign up

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