Event – Aligning Executives with Enterprise Goals: NZPC

Recently, Tribe Executive hosted a New Zealand Private Capital (NZPC) event in our Auckland office, bringing together James Brooke, Managing Partner at Tribe Group, Clive Ormerod, CEO of AS Colour, and Craig Styris, Executive Director at Pioneer Capital to discuss executive incentives in private capital. The conversation was expertly facilitated by Colin McKinnon of NZPC, providing a forum for open discussion about purpose, practice, and pitfalls in incentive design. 

Drawing on both the panel insights and a recent survey of industry participants, several key themes emerged for private capital executives and boards navigating the New Zealand market. 

Purpose vs Practice: The Incentive Paradox 

Survey respondents were almost unanimous on the purpose of executive incentives: align management with investor returns, drive enterprise value, and support retention of key talent. Yet, despite agreement on intent, execution is highly inconsistent. Participation ranges from the CEO and C-suite only, to broader senior leadership teams. “At-risk” compensation varies from under 20% to over 60% of total pay. Metrics differ, EBITDA dominates, but revenue, strategic milestones, and even cultural indicators are inconsistently applied. 

The takeaway? Everyone agrees on why incentives exist, but very few agree on how to implement them. 

The NZ Market Reality: No Standard Playbook 

The New Zealand private capital market was described as a “Wild West” of incentive structures. Each company approaches long-term incentives differently, from ESOP allocation and strike prices to vesting schedules. Unlike more mature markets like the US, where standardised valuation practices create consistency, New Zealand boards often start with a blank sheet of paper. 

Panellists highlighted that this variation could make it difficult for executives moving between companies to accurately value their incentives. It also places significant pressure on boards that lack clear benchmarks, creating both uncertainty and risk of misalignment. 

Balancing Risk and Reward: How Much is “At-Risk” Enough? 

Survey responses show a common range of 20–40% for at-risk compensation, but opinions vary widely. Too little risk may fail to motivate; too much can destabilise teams or encourage short-term thinking. 

The discussion noted the importance of simplicity in design. Focusing on share price as a clear metric, tied directly to enterprise value, avoids overly complicated formulas that can inadvertently drive adverse behaviour. 

Metrics Matter, But Behaviour Matters More 

Financial metrics, particularly EBITDA, dominate incentive plans. However, the panel stressed that misaligned metrics can unintentionally erode enterprise value. 

For example, incentives tied too closely to short-term financial goals can encourage accelerated sales or cost-cutting at the expense of sustainable growth. In other words, what gets measured and communicated drives behaviour, and misalignment here can undo the very value the incentive was meant to create. 

When Incentives Backfire: Lessons from Experience 

Both the survey and panel discussion highlighted cases where poorly designed incentives caused unintended consequences: 

• Executives disengaged because they didn’t understand how their incentives were valued.  

• Structures that penalised participation in follow-on investment slowed strategic execution.  

• Misalignment during long-term liquidity events created retention risks.  

The key lesson: incentives must be clear, transparent, and tied to outcomes executives can influence. 

Beyond Pay: Incentives as Leadership Signals 

Incentives are more than compensation tools, they communicate priorities, signal culture, and support retention. Panellists emphasised that successful plans clearly outline valuation, timing, and impact, and are communicated personally when possible. 

Culture, while often overlooked, can be integrated through STI metrics like employee engagement or Net Promoter Score (NPS). Even partial measures help align leaders with broader enterprise goals, reinforcing the behaviours that deliver long-term value. 

Practical Principles for Executive Incentives in Private Capital 

Drawing from the conversation and survey insights, several actionable principles emerged: 

1. Align to Enterprise Value: Incentives should clearly link to metrics executives can influence. EBITDA and share price are simple but effective anchors.  

2. Clarify Roles and Participation: Define who is included, and why, to foster alignment across leadership teams.  

3. Balance Simplicity and Risk: Avoid overly complex formulas that are difficult to value or communicate.  

4. Communicate Transparently: Executives must understand what their incentives mean, how they vest, and how they are valued.  

5. Measure Behaviour and Culture Where Possible: Include simple metrics for engagement or culture to reinforce strategic priorities.  

6. Iterate and Learn: Use feedback loops from past plans to refine future incentive structures.  

The conversation highlighted that while New Zealand’s market is fragmented, there is growing alignment on best practices. With thoughtful design, clear communication, and a focus on both enterprise value and culture, incentives can not only reward executives but also drive sustainable growth, making businesses more attractive to investors and better equipped for long-term success. 

James Brooke from Tribe Executive is open to continuing the discussion of incentivisation in private capital businesses. Alternatively, our Tribe Executive team specialise in Executive Search, Board Appointments and Advisory and are here to support you.