Why benchmarking seldom determines the figure a Board settles upon

By Rebecca Perrone, MAICD, Managing Director, Brooker Consulting

16 September 2026

From the Search Room

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Most Boards believe the number they land on for a new CEO’s remuneration comes from the benchmark data in front of them. Having sat through a lot of these conversations, I can tell you that’s rarely how it actually goes.

What actually happens

The remuneration committee receives the remuneration benchmark report: percentiles, a peer group, a recommended range. On paper, that’s what decides the number.

In the room, though, the real reference point is usually the outgoing CEO’s actual package. Every director already knows that figure, often to the dollar, long before the benchmark report exists. So the conversation rarely starts from the data. It starts from whether the new number should be higher or lower than the old one, and the benchmark ends up justifying a figure the room has already half-settled on rather than genuinely setting it.

A fair defence

None of this is careless. Anchoring to a known, previously approved figure feels safer than starting a first-principles argument from scratch. It’s easier to explain to the workforce that’s watching, and it avoids reopening ground the Board already fought through a few years ago.

Where it stops working

This reliance breaks down when historical benchmarks fail to reflect an evolving strategic mandate. If a former executive oversaw a period of operational stability, but the new appointment must execute a complex turnaround, drive corporate integration, or lead a significant capital raise, the core demands of the position have fundamentally shifted. When a committee remains fixated on a legacy compensation ceiling, it invariably prices the historical role rather than the actual strategic challenges ahead.

The inverse scenario proves equally flawed. A position requiring less operational intensity frequently retains an artificially inflated compensation figure simply because it represents the established internal standard—a metric rarely subjected to rigorous external evaluation.

In both instances, governance oversight falters: the organisation evaluates yesterday’s requirements instead of compensating for future demands.

What the strong Boards do differently

They separate two conversations that normally get run as one: what the departing person earned, which is a historical fact, and what the incoming mandate actually requires, which is a judgement call the Board still has to make. And they have the mandate conversation first, before the historical number gets anywhere near the table. Some committees will not let the previous package figure into the room at all until the mandate has been debated on its own terms. The first time I saw a chair do that, I thought it was overkill. It isn’t. It’s the only way to find out what the committee genuinely thinks the job is worth, rather than what it thinks it should say.

That discipline only works, though, if the comparator group underneath it is built properly, and this is where a lot of benchmarking falls short. Market capitalisation and industry classification are easy to pull from a database, but they say very little about what the job actually involves. The comparator set needs to be built around the real size, scale and complexity of the role: revenue and asset base, workforce and geographic footprint, regulatory and stakeholder exposure, and where the organisation sits in its own strategic cycle. 

Two companies of identical size can require completely different executives, and a peer group built purely on capitalisation will always miss that. Getting this right takes proper research into each comparator, not a database query, and it’s the difference between a benchmark that holds up when a director asks a hard question and one that only sounds like it would.

One move worth trying

Before the next remuneration conversation, ask the committee to put the mandate’s complexity in writing first: the size, scale and structural demands of the role, not its title. Only then bring in the previous incumbent’s number and the remuneration benchmarking data. Watch how much the figure moves, and how much the comparator group changes, once the anchor comes last instead of first.

A closing thought

A benchmark is only as good as the mandate it’s measuring against. If the room already knows the answer before it opens the report, that’s not analysis. It’s confirmation.

Brooker Consulting works with Boards on CEO appointments and remuneration benchmarking.

If this piece was useful, I would welcome a conversation.

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Previous news articles:

• A board can meet all governance standards but still be ineffective
• Most Boards can name a successor. Far fewer have tested one.
• How Australian boards choose an executive search partner: a chair’s guide
• An interim appointment is not a pause button
• Why benchmarking seldom determines the figure a Board settles upon