European consumer staples

Research evidence excerpt

European consumer staples

RBC Europe Limited

James Edwardes Jones

(Analyst)

+44 20 7002 2101,

james.edwardesjones@rbccm.com

June 8, 2026

European consumer staplesRESEARCH Paying for performance?

Our view: Remuneration committees put themselves through numerous hoops to align senior

managers' remuneration with shareholders' interests, much of it misplaced. We find it surprising how

little recognition volume growth, the biggest determinant of long-term share price performance (see

Ch-ch-ch-ch-changes), gets in deciding management compensation. Only ABI and Danone include it

as a contributor to management's annual bonuses, although four others incorporate market share,

which fulfils a similar role. In general, this questionable alignment doesn't matter too much, because

executives' wealth is directly tied into their companies' share prices by means of meaningful minimumEQUITY

shareholding requirements; (the single exception is Beiersdorf, which not only has no minimum

shareholding threshold, but also pays 100% of variable remuneration in cash, not shares).

In this report, we consider which companies incentivise their executives most effectively so as to

align their interests with their shareholders'. (We recognise that there are other stakeholders, but as

investment analysts we concentrate on shareholders.) Perhaps not surprisingly, every company we cover

has profitability as a performance measure to be considered in calculating the annual bonus, with

revenue growth and cash flow not far behind. For long-term incentives, share price performance and

ESG/CSR measures are the most widely used, with revenue, profitability and cash flow also in the mix.

What's largely overlooked is volume. We believe that long-term share price performance is more a