Incentives and measures are one of the five places attention accumulates, and remuneration is the committee that sets them.
Why it matters when the plan changes
Strategy changes in a board meeting; incentive plans change at the next cycle, if anyone connects the two. In the interval the organisation is told to do one thing and paid to do another, and it does what it is paid for. That is the same lag that appears whenever a decision approved quickly must be reinterpreted across thousands of existing decisions and routines. Incentives and measures are one of five layers where attention accumulates, and they move slowly, which is why the mismatch persists long enough to shape outcomes.
The tension is that pay structures are deliberately stable. Frequent changes undermine credibility, complicate reporting and invite shareholder scrutiny; governance codes assign remuneration to the board as its own defined area, alongside audit, risk and control, precisely because it is meant to hold steady. Stability is a real virtue, and it is the same property that makes incentives the slowest of the five levers to move when a strategy shifts.
In practice
A company announces a shift to fewer, larger bets. The annual bonus still pays on the number of initiatives delivered. Twelve months later the initiative count has grown and everyone reports it as a failure of focus. Each addition was rational for the person making it.
Evidence
Governance codes assign remuneration to the board as one of its defined areas alongside composition and control.
Financial Reporting Council, UK Corporate Governance Code (2024)Most managers do not believe stated priorities are properly resourced, which is what a mismatch between stated strategy and paid-for behaviour produces.
Donald Sull, Rebecca Homkes and Charles Sull, Why Strategy Execution Unravels and What to Do About It, Harvard Business Review (2015)
What it cannot tell you
Remuneration committee oversight tells you whether pay measures have been reset, not whether the reset measures actually match the new strategy's demands. It is silent on decision rights, meetings, and habits, the other layers where attention accumulates, and a committee can align pay perfectly while priorities and dependencies remain unresolved elsewhere.
Questions
Usually at the next plan cycle, which can be up to a year, and longer where long-term incentive plans are already in flight. The UK Corporate Governance Code, updated in 2024, treats remuneration as one of the board's defined areas, alongside audit, risk and control, which is precisely why it moves on its own separate cycle rather than the strategy's.
No, and the tension is real. Frequent changes undermine credibility and invite scrutiny. What can change much faster is the weighting between existing measures and the objectives set within a given plan, which moves behaviour without requiring anyone to rewrite the underlying structure.
Volume measures surviving a shift to focus. A 2015 Harvard Business Review study by Donald Sull, Rebecca Homkes and Charles Sull found only 11% of managers believed all their company's strategic priorities had the resources needed to succeed, the same mismatch a bonus still paying on throughput produces when the strategy has moved to fewer, larger bets.
Rarely as such. It sees pay outcomes against measures, which is a lagging view of whatever behaviour the measures produced. The connection between the measures it sets and the plan's chance of landing is not usually anyone's agenda item at all.
Whoever owns the plan, at the point the strategy is approved rather than at the next remuneration cycle. Raised then it is a design question about the plan; raised later it is a request to change pay, which is a much harder conversation.