Australian Brands Add Reputation Metrics to Executive Pay Amid Customer Backlash

Iconic Australian brands tie executive pay to reputation, reflecting the growing importance of stakeholder governance and communication in maintaining corporate reputation amid economic challenges.

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Geeta Pillai
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Australian Brands Add Reputation Metrics to Executive Pay Amid Customer Backlash

Australian Brands Add Reputation Metrics to Executive Pay Amid Customer Backlash

In a significant shift, iconic Australian brands Woolworths, Qantas, and AMP have incorporated reputation metrics into their executive pay calculations for 2024. This move comes in response to growing customer backlash over issues such as high profit margins and poor communication during crises.

The decision to tie executive compensation to corporate reputation reflects the increasing importance of reputation management, especially as the economy weakens and cost of living concerns take center stage. Reputation consultancies like RepTrak are seeing higher demand for their services as companies seek to better understand how they are perceived by the broader community.

Why this matters: The speed at which once-beloved brands can face public backlash highlights the critical role of stakeholder governance and communication in maintaining corporate reputation. As economic challenges persist, companies that prioritize reputation management may be better positioned to weather crises and retain customer loyalty.

However, the use of reputation metrics for executive pay has drawn skepticism from some proxy advisory firms. They argue that preserving a company's reputation should be a core responsibility of CEOs rather than a bonus-worthy achievement.

In a statement, a Woolworths spokesperson emphasized the company's commitment to rebuilding trust, saying, "We understand the importance of listening to our customers and communities. Incorporating reputation metrics into our executive remuneration structure ensures that we are held accountable for maintaining the trust and loyalty we have built over many decades."

As public scrutiny intensifies and economic headwinds persist, Woolworths, Qantas, and AMP's proactive approach to reputation management sets a precedent for other major Australian brands. The effectiveness of tying executive pay to corporate reputation will be closely watched in the coming years, as companies navigate the delicate balance between financial performance and public perception.

Key Takeaways

  • Major Australian brands tie exec pay to reputation metrics in 2024.
  • Reputation management is crucial as economy weakens and cost of living rises.
  • Some argue preserving reputation should be a core CEO duty, not a bonus.
  • Woolworths commits to rebuilding trust through reputation-linked pay.
  • Effectiveness of reputation-based pay will be closely watched by other brands.