Rethinking CEO remuneration policies in luxury

Luca Solca’s review of remuneration policies of 12 leading luxury goods companies found that senior remuneration is ill-aligned with the interests of shareholders as the variable component of the remuneration is not tied to either cash generation, return on invested capital (ROIC) or total shareholder return (TSR), i.e. share price performance plus dividends. He states that CEO remuneration policies like these are out of date and that recognising this would be a big step towards attracting investors in today’s more subdued growth environment.

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