One key issue contributing to the pay-performance disconnect is the structure of executive pay packages. Short-term incentives,
such as annual bonuses, are often tied to short-term financial targets like revenue growth or EBITDA, which may not reflect sustainable, long-term value creation. Long-term incentive plans (LTIPs), while designed to reward long-term performance, often vest over relatively short periods—typically three years—and are frequently linked to TSR or EPS targets, which can be manipulated through share buybacks or aggressive cost-cutting.
