Family Firm LTIP:
Competitive long-term compensation without a share price.
Family businesses face a unique challenge: they need to competitively compensate and retain executives long-term, without the reference point of a share price. The Obermatt Family Firm LTIP solves this problem with indexed operational performance measurement.
Without publicly traded shares, family businesses lack a key compensation instrument: the share price as an objective performance benchmark. Traditional LTIP models based on stock options or performance shares are simply not applicable. At the same time, family businesses compete with listed companies for the best talent.
The challenge: LTIP without a share price
Setting targets and thus measuring performance becomes increasingly difficult in uncertain times. Nevertheless, compensation should be reliable and reward long-term growth, not just short-term profit maximization. Family businesses need a solution that compensates for the missing share price while creating performance clarity.
Missing share price
Without a publicly traded share price, the most important reference point for performance-based compensation is missing. Traditional LTIP instruments such as stock options or performance shares are not available.
Competition for talent
Family businesses compete with listed companies for the best executives. Without competitive long-term incentives, there is a risk of losing top talent.
A crisis-proof LTIP is the key to attracting the best talent in the market and retaining them long-term.
The solution: Indexed Obermatt LTIP
The indexed Obermatt LTIP compensation plan creates both performance clarity and decisive growth incentives within the company. The LTIP Index helps overcome the challenge of missing share prices and is the key to building and consolidating market leadership.
Instead of the share price, the Obermatt LTIP uses operational metrics such as revenue growth, margins and return on capital. These metrics are indexed against a tailored peer universe, neutralizing external market influences so that only the company's relative performance counts.
Crisis-proof payouts
The LTIP provides reliable, performance-based payouts even in uncertain times. Indexing against peers neutralizes economic cycles.
Market comparisons without a share price
Operational metrics enable objective comparisons with competitors. This creates performance clarity that would otherwise only be possible through the share price.
Long-term growth incentives
The LTIP rewards sustainable growth over multiple years. Short-term profit maximization is avoided in favor of long-term value creation.
The Plansee Success Model
The Plansee Group is a world-leading manufacturer of molybdenum and tungsten components, headquartered in Reutte, Austria. The family-owned enterprise, in private ownership of the founding Schwarzkopf family, has over 100 years of history, with around 11,000 employees at 41 production sites manufacturing approximately 100,000 products from refractory metals.
As a family business, Plansee faced the challenge of balancing long-term strategic goals, the financial interests of the owning family, and the motivation of top executives. Traditional compensation systems based on internal budgets were often non-transparent and created the wrong incentives. Discussions were lengthy and discretionary.
In collaboration with Obermatt, Plansee introduced the Obermatt Index — an indexed Long-Term Incentive Plan (LTIP) for variable compensation. This system decouples compensation from internal budgets and instead relies on direct peer comparison using publicly available data.
“As a private company, we must keep our market environment firmly in sight. We must have the performance aspiration within us and measure ourselves against the market.”
Fairness and transparency
The method removes volatility from compensation and brings more fairness. Payouts are now reliable and performance-oriented, even in economically difficult times.
Clear performance measurement
The index enables the company to measure its performance objectively and compare itself with the market. This creates performance clarity and sets important growth incentives.
Focus on competition
The new method promotes team spirit and a shared focus on being better than the competition, instead of fulfilling internal budget targets.
“We used to have many discretionary elements in compensation. Now, thank God, there are far fewer discussions — it's much more honest.”
“We want to be strategically number 1, 2, or 3. And we want to grow faster than the market. The Obermatt Index is the instrument to get there.”
Bridging the gap between family owners and executives
To remain competitive, companies must attract and retain the best talent. At the same time, the company's actual market position must be made transparent. The Obermatt LTIP creates this transparency and aligns the interests of owners and management.
The market leader for family businesses
Obermatt already serves numerous large family-owned companies with indexed performance measurement and LTIP compensation plans. Our pragmatic approach saves time and money, and delivers a compensation system that convinces both owners and executives.
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