The Remuneration Gap
The incentive plan rewards an AI efficiency gain and measures nothing of the concentration risk built beside it: ask the one question, then close the gap without redesigning executive pay.
Scope. About 6-page playbook: the question, three targeted fixes and a Remco record. Governance toolkit: practitioner-designed, for use in your context.
The executive who moved 40% of customer volume onto a single AI provider hit every efficiency target doing it. The bonus was earned. The appraisal read well. At every step, the incentive plan confirmed the decision was the right one. What the plan never measured was the concentration risk built alongside the gain — the untested fallback, the provider leverage, the exposure that would surface two years after the bonus was paid. The board had built a plan that rewarded the creation of a problem it would later have to govern.
One question for the remuneration committee
The Remuneration Gap is a focused instrument for the one question the remuneration committee needs to ask about AI: what does the incentive plan measure, and what does it miss? It shows how efficiency-based incentives quietly reward the building of AI concentration risk, and how to close the gap without redesigning executive pay.
Use it in the remuneration committee's review of incentive design: ask the question, choose one of the three fixes, and record the decision for the minutes.
The question, the fix, and the record
- The mechanism by which efficiency incentives reward hidden risk-building
- The single question for the Remco chair, with the follow-ups that give it teeth
- Three ways to close the gap that stop short of a full pay redesign
- The link to the dependency threshold the incentive plan should be measured against
- A worksheet: the Remco record of the question, the answers, and the decision
Whenever an AI efficiency gain is being rewarded
Built for the committee that sets the incentives
Written for the remuneration committee chair. It also serves committee members, board members who have read the dependency question and asked what the incentive plan is doing about it, and the CFO or reward lead who designs the plans and would build the risk measure in, to avoid explaining its absence later.
A plan that measures what it rewards
You'll know whether the executive incentive plan rewards efficiency while ignoring the risk that efficiency creates, and close the gap with a targeted change that leaves the design of executive pay intact. The Remco's decision and its reasoning reach the minutes.
A practitioner-designed toolkit to be applied in your own context.
The Remuneration Gap
Catalogue No. 08 · €[PRICE] · Digital delivery