Nestlé Tightens Executive Pay Links to Performance Targets

Nestlé introduces a 'RIG-Gatekeeper' linking executive pay to growth targets, overhauls employee bonuses for greater differentiation, amid strategic portfolio changes.

The Swiss food and beverage giant Nestlé is implementing a stricter compensation framework, directly tying bonus payouts for its leadership team to concrete growth metrics. This move introduces a new performance gatekeeper for management incentives.

Management Bonuses Now Contingent on Growth Threshold

A central feature of the revised policy is the newly established "RIG-Gatekeeper" clause. This provision makes the payment of any variable compensation to executives conditional on the company achieving a minimum level of Real Internal Growth (RIG). The clear message from CEO Philipp Navratil is that growth targets must be delivered, not just planned. The aim is to increase RIG beyond the 0.8% recorded for 2025 in the current period.

Revised Bonus Structure for Broader Workforce

Alongside the executive changes, Nestlé has unveiled a new bonus system for its general employee base, designed to create greater differentiation in rewards. The structure shifts to offer higher potential upside but with less cushion for underperformance.

Employees rated as delivering "exemplary" work can now receive up to 150% of their bonus target, a significant increase from the previous cap of 130%. Conversely, those receiving an "unsatisfactory" rating will be eligible for only 0 to 50% of their intended premium, making weaker assessments more consequential. Specific team-based targets will continue to define the bonus goals.

Strategic Overhaul Progresses Amid Strong Share Performance

This compensation reform arrives as Nestlé advances a broader strategic portfolio review. The company reported 4% organic sales growth for the fourth quarter of 2025 and is targeting 3 to 4% organic growth for 2026.

Portfolio adjustments are underway, including advanced negotiations for the sale of its remaining ice cream operations to the Froneri joint venture. Furthermore, formal plans are in place for the deconsolidation of its water business, with completion expected by 2027.

Investors have responded positively to the overall strategic direction recently. Nestlé shares are currently trading at €90.77, standing just 4.3% below their 52-week high of €94.88. The equity has posted a substantial gain of 16.24% over the past 30 days.

The coming months will place a sharp focus on whether Nestlé can meet its internal growth benchmarks. With the new "RIG-Gatekeeper" in effect, executive bonus payments are now directly linked to this outcome, even as the company continues its strategic transformation with the ice cream transaction and water business deconsolidation through 2027.