Remuneration Pulse December ’25
Incentive Market Practice 25/26
STI & LTI trends shaping incentive design, performance
alignment and retention decisions for the year ahead.
Drawing on insights from Australian organisations across listed, private and government sectors, this special edition of the Remuneration Pulse provides a focused view of how short-term and long-term incentives are being designed, targeted and refined as organisations plan for FY26 and beyond.
What’s Inside This Edition
✔️ Short-term incentive (STI) prevalence, structures and payout practices
✔️ Long-term incentive (LTI) participation beyond executive roles
✔️ Target opportunity levels by role and organisation type
✔️ Performance differentiation: where it works – and where it breaks down
✔️ STI cost as a proportion of profit
✔️ Evolving performance metrics (financial, operational, ESG)
✔️ Planned changes to incentive frameworks heading into FY27
Why Incentive Design Is Under The Microscope
Incentives remain one of the most powerful – and scrutinised – levers in reward frameworks. As cost pressures persist and expectations around fairness, alignment and governance continue to rise, organisations are reassessing how effectively their STI and LTI arrangements drive the outcomes they intend.
This Pulse highlights where incentive frameworks are becoming more structured and performance-linked – and where discretion, complexity or misalignment are creating risk.
Who This Pulse Is For
✔️ Board and Remuneration Committee members
✔️ People & Culture leaders
✔️ Reward, remuneration and HR professionals
✔️ Finance leaders involved in incentive governance
✔️ Executives reviewing incentive effectiveness and retention risk
About The Pulse
This edition of the Remuneration Pulse is based on responses from organisations across Australia, spanning listed, private, government and not-for-profit entities.
Results are presented with interpretive commentary from The Reward Practice, highlighting market trends, sector differences and practical implications for incentive design.
Let’s Talk Through the Findings
If you’d like to discuss how the STI and LTI insights from this Pulse relate to your organisation — including incentive structure, target levels or performance alignment — book a short 15-minute call with one of our directors.
Key Insights At A Glance
STI remains dominant
Short-term incentives continue to be the primary performance reward mechanism across most organisation types.
LTI participation is expanding
Long-term incentives are increasingly extending beyond executive populations into senior specialist and management roles.
Performance sharing leads STI design
Balanced scorecard-style STI structures are now the most common approach.
Differentiation remains uneven
Many organisations still struggle to meaningfully differentiate rewards between high and low performers.
Refinement over redesign
Most organisations are focused on improving existing incentive frameworks rather than wholesale change.
STI and LTI remain core components of reward frameworks, with organisations increasingly focused on performance alignment, differentiation and longer-term retention.”
— December 2025 Remuneration Pulse