After years of stagnation and recession, many companies want to return to growth. The very practical question arises as to the extent to which target, incentive and compensation systems match the desired growth orientation.
The “Corporate Governance Study 2026”, which the consulting firm Kienbaum carried out from the end of 2025 to the beginning of 2026, shows that, regardless of the size of the company, growth is a high or even very high priority for a clear majority of the companies surveyed. There is also another relevant finding: companies see growth as more than just a market or sales issue. The study participants also see internal control levers as essential for implementing the growth agenda.
The participating companies consistently rate people-related growth levers as somewhat relevant or very relevant. For four out of five companies, performance management is an effective lever for implementing the growth strategy pragmatically and promptly.
Existing compensation systems in many companies are not inherently inaccessible to growth. In practice, however, especially in medium-sized companies, there is often a compensation logic that focuses on participation in earnings figures such as EBIT or annual net income. Such systems are understandable for several reasons: They are easy to communicate, administratively manageable and are also closely tied to established control variables. However, their logic is often more focused on stability, predictability and securing results than on additional added value.
This does not mean that outcome measures are fundamentally unsuitable as key figures. What is more important is how companies use these key figures in their compensation system. Classic participation in stock sizes primarily rewards maintaining or securing an achieved level. As a rule, there is only a limited amount of substantial growth impetus from this.
Why compensation systems often don’t really incentivize growth
For companies with strong growth ambitions, the question arises as to whether the existing system actually incentivizes additional growth in value or whether it primarily secures the existing portfolio. The study mentioned shows that this question is by no means trivial. A total of 64 percent of those surveyed somewhat or completely agree with the statement that the board’s compensation systems are specifically geared towards long-term growth. However, there is a clear gap in perception behind this value: While around three quarters of the supervisory board members (73 percent) agree with this assessment, less than three fifths (57 percent) of the board of directors do.
A similar picture emerges when it comes to the question of whether the long-term portion of variable compensation is high enough to promote real performance behavior in the long term. Overall approval here is 57 percent, supervisory boards agree 62 percent, executive boards 54 percent.
The perception gap shows that the growth effectiveness of existing compensation systems should not simply be assumed. Rather, it is worth taking a closer look at the underlying compensation logic: What behavioral incentives are actually set? Is existing assets more likely to be rewarded or growth? Does this fit with the company’s strategic growth agenda?
Against this background, it is worth looking at companies that consistently align their compensation systems with growth, increased value and profit potential (entrepreneurial upside). Design principles can be derived from their practice that can also be relevant for medium-sized and unlisted companies.
How startups and private equity firms align compensation for growth
If you want to understand how growth-oriented compensation works in its most consistent form, you should look at those companies where growth itself is part of the business model or ownership logic. Particularly in the start-up, scale-up and private equity environment, compensation is often more focused on increasing value and entrepreneurial development.
The following three features are characteristic:
- More long-term: A larger part of the variable compensation does not depend on short-term annual performance, but rather on development over several years.
- Closer connection to performance: Variable remuneration is more closely linked to increasing value than to simply achieving ongoing results.
- Cleared Chance-Risk-Profile: If growth is successful, relevant upside arises for the plan participants. If there is no growth success, the variable remuneration will also be noticeably lower.
Specifically, this logic often manifests itself in high-growth companies in the form of stock plans, virtual participation models or systems similar to stock options. What these instruments have in common is that they focus on the increase in company value after granting.
Additionally or alternatively, key figures are used that are closely linked to value creation and scaling – such as multi-year sales growth, EBITDA development or clearly defined strategic growth goals. In contrast to classic profit sharing, it is less about rewarding a level achieved and more about incentivizing additional development.
However, this blueprint should not be misunderstood. It is not about transferring growth-oriented compensation systems from the tech or private equity environment one-to-one to other companies. Especially for medium-sized and unlisted companies, such models would often be too complex, culturally incompatible or not wanted from a governance perspective.
The specific instrument is therefore less relevant than the logic behind it: more long-term focus, a stronger orientation towards value growth and a compensation mechanism that not only accompanies growth, but also noticeably promotes it. This logic can also be used to derive practical design approaches for other companies.
Growth-oriented compensation in medium-sized companies: two models in comparison
The crucial question is therefore not whether medium-sized companies need stock options, but rather how the basic principles of growth-oriented compensation can be translated into simpler, compatible models. In our consulting practice, we see two common design options in such constellations: a multi-year target bonus with growth targets and a multi-year participation in the increase in value. The difference between the two variants lies in the design logic.
Multi-year target bonus with growth targets: when it is suitable
A multi-year target bonus with growth targets is particularly suitable if companies can clearly describe their growth ambitions and translate them into a multi-year target system. The payout can, for example, be linked to key figures such as sales growth, EBITDA growth or the development of a new business area.
The main difference to the classic annual logic lies in the multi-year nature: the focus is not on the short-term achievement of goals in a single year, but on sustainable development over a longer period of time. This creates a stronger incentive to make decisions that may be stressful in the short term, but promote growth and competitiveness in the long term.
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The Kienbaum consulting firm carries out the corporate governance study annually. Between November 2025 and January 2026, around 170 supervisory board and executive board members from Germany and Austria took part and shared their perspectives on current developments, structural changes and new requirements.
Participation in the increase in value: closer to the owner’s perspective
A multi-year participation in the increase in value, on the other hand, is less based on target lines that have been defined in advance, but is based on an actually realized increase in a size close to the value. For example, the payout can be based on multi-year EBIT growth or the development of the company’s value.
For companies that already work with earnings metrics today, participating in multi-year EBIT growth can be a pragmatic start: it uses a familiar control variable, but shifts the compensation logic from the achieved level to additional development.
A link to the company’s value development is even more oriented towards the owner’s perspective, even if this requires a consistent and comprehensible valuation logic. What is crucial is not only to incentivize growth more strongly, but also to promote it in a value-oriented and controllable manner.
Growth-oriented compensation needs clear guidelines so that additional dynamics do not come at the expense of economic quality – for example through falling margins, weaker cash conversion or excessive capital commitment.
In practice, growth impulses should therefore be accompanied by a few but effective security mechanisms, for example minimum requirements for profitability, liquidity or suitable return indicators.
Especially in medium-sized companies, the strength of good compensation systems does not lie in maximum complexity, but in understandable logic that promotes additional added value without losing sight of the company’s financial controllability.
