Geopolitical uncertainty puts executive remuneration under pressure

Every year, PwC analyses the remuneration of executives and supervisory board members at Dutch listed companies (AEX, AMX and AMS Next 20). The survey examines fixed remuneration, short-term and long-term incentives, and the ratio between fixed and variable remuneration. The report thus provides executives, supervisory board members, shareholders and other stakeholders with insight into current remuneration trends and a benchmark against which to compare their own policies with those of the market.

The 2026 survey shows that executives’ remuneration continues to rise, with variable remuneration forming a substantial part of the total package. For AEX CEOs, both the fixed salary and total direct remuneration rose by an average of around 5 and 6 per cent, respectively, in 2025. At the same time, the scope for variable remuneration is significant.

Geopolitical uncertainty is affecting the calculation rules

What is particularly striking in the 2026 survey is the expected impact of volatility, geopolitical tensions and shortages of raw materials and labour on remuneration policy. ‘These factors are by no means always controllable and can have unintended effects on remuneration,’ explains Sander Schouten, Director executive Reward.

'Sometimes things turn out favourably, for example for banks when mortgage rates rise, or for certain energy companies when the price of oil rises. But in the automotive industry or the food and agriculture sector, it can mean that you do not receive your means of production on time or have to pay too high a price for them, even though this is partly or entirely beyond the management's control. This presents remuneration committees with a difficult dilemma: should executives be rewarded for positive effects that are beyond their control? And conversely, should executives be protected against negative effects, or should they be prepared for them?’

The survey highlights the same trend: performance is being assessed more broadly than simply on the basis of pre-defined financial targets and formulaic approaches, and there is a growing focus on how management deals with uncertainty and whether this fits within the context in which the organisation operates.

Discretion: desirable, but a sensitive issue

To deal with unforeseen circumstances, companies build flexibility into their remuneration policies, in order to adjust current KPIs annually or to normalise results, for example. The extent to which a remuneration committee is given scope to do so remains a sensitive issue. ‘The debate now centres on the extent to which discretionary powers can be granted to the Supervisory Board and the remuneration committees,' Schouten continues. 'There is a desire to do so, but it is often not fully accommodated. Many shareholders are reluctant to relinquish that control entirely.’

Also for the Supervisory Board itself, greater discretion is not a free pass: it simultaneously opens the door to discussion with the Executive Board. A balance must therefore be struck between a formulaic approach to remuneration and the judgement of a Supervisory Board that takes the context into account. ‘That is no easy task,’ says Schouten. In his view, discretion only works within a robust governance and transparency framework, with clear criteria and explanations both beforehand and afterwards.

From pay design to pay justification

The remuneration committee’s work does not, therefore, stop at designing a sound remuneration policy. The committee must also be increasingly able to justify it: why is remuneration increasing, why have these KPIs been chosen, why is a bonus justified and how does it relate to the company’s performance? The quality of the rationale behind the remuneration thus becomes almost as important as the design and the remuneration itself.

The balance continues to be a topic of discussion

The balance between executives’ remuneration and that of staff also remains a sensitive issue. ‘For example, there is a specific pay ratio: how many times more does the CEO earn than the average employee?’ says Schouten. ‘In the Netherlands, it would be unwise to allow that ratio to rise further without providing a sound justification, as this often leads to public debate. The same sensitivity applies when companies cut costs or restructure: if the director still receives the maximum bonus based on the pre-agreed formula, this can quickly lead to a difficult discussion with staff and other stakeholders.’

Not just the amount, but above all the justification

The thread running through the 2026 survey is therefore not merely that variable remuneration is becoming more important. As circumstances become more unpredictable, there is also a growing need to carefully justify remuneration decisions. Greater customisation and flexibility can help to assess performance more fairly, but at the same time this places higher demands on governance and transparency.

The question facing remuneration committees is therefore shifting from ‘what is the correct calculation of remuneration?’ to ‘what level of remuneration is justified in these circumstances?’ And just as importantly: is it possible to make adjustments and can committees explain that decision convincingly to shareholders, employees and other stakeholders?