How do you reward top performers without repricing everyone else?

Most bonus plans can recognise good performance. Far fewer can recognise exceptional performance without making everyone else more expensive.

That is a problem I am seeing more often in practice. Businesses want sharper differentiation. They want more freedom to recognise the people who create disproportionate value. But they do not want to reprice the whole variable pay framework just to solve for a relatively small group.

Take a simple example. A business may have 200 managers in its bonus framework. Most are performing well and the plan is doing what it is supposed to do. But in one year, three people materially change the picture. One helps turn around an underperforming business unit. One lands a strategically critical contract. One stays through a difficult transformation in a role the business really cannot afford to lose.

The business wants to recognise those people more sharply. The problem is that the normal bonus framework was designed for consistency across a broad population, not for dealing with a small number of genuinely exceptional contributors.

Concentration is what you need

The easy response is to increase target bonus opportunity more broadly. In my view, that is often the wrong move.

If the real differentiation issue only concerns 8 or 10 people, increasing opportunity across 200 managers is inefficient. It increases cost, raises expectations and is difficult to unwind later. What starts as an attempt to create headroom for a small number of exceptional contributors can quickly become a permanent rebasing of pay.

Where the issue is concentrated, the answer should be concentrated too.

A more precise answer

That is why I think more employers should consider a separate, tightly governed cash-based award for top performers.

Not another LTIP. Not a broad enhancement to annual bonus. Not a disguised market adjustment. I am talking about a narrowly targeted overlay designed to recognise contribution that genuinely sits outside the normal framework.

In practice, many businesses already do a version of this. They have a small discretionary recognition pot - sometimes run through the CEO, sometimes through the executive committee, often with HR and Remco oversight - which is used to reward a handful of people who have delivered something the ordinary bonus framework was never really designed to capture. A critical contract. A transformation milestone. A turnaround. The real question is not whether that mechanism exists. It is whether it has been properly designed.

Used properly, it gives a business a controlled route to sharper differentiation without resetting bonus opportunity for the whole management population.

What “exceptional” should mean

The key is that “exceptional” has to mean something precise.

This is where many discretionary arrangements go wrong. They rely on vague language: “above and beyond”, “outstanding contribution”, “special impact”. That is rarely robust enough to support repeatable decision-making.

In my view, the strongest criteria tend to be things like these: exceptional delivery against strategic priorities; clear outperformance in a business unit or function; leadership behaviour that materially strengthens the organisation; critical-skill retention in roles of real commercial importance; or marked in-year improvement where the trajectory itself matters.

That forces the business to ask not “who do we feel best about?” but “whose contribution genuinely sat outside the design assumptions of the normal framework?”

Why cash can be the right tool

Top performer pay does not always need to mean equity.

Equity remains the right tool in many contexts, particularly where the objective is long-term alignment and sustained value creation. But where the objective is immediate recognition of exceptional annual contribution, near-term retention of a critical individual, or reward for delivery of a discrete strategic priority, cash may be the better instrument. It is immediate, visible, easier to communicate and operationally cleaner.

Sometimes the point is not to create another long-term wealth opportunity. It is to send a clear message this year: what you did mattered disproportionately and the business is prepared to recognise that directly.

Governance is everything

Of course, the governance has to be right.

These arrangements only work if they are bounded by clear guardrails. Otherwise, they drift quickly into perceived favouritism. If criteria are loose, award histories are opaque or senior leaders start using the mechanism as an informal way to make selective retention payments, the legitimacy of the whole arrangement starts to erode.

There is a useful practical test here. If the same person receives the “exceptional contributor” award three years in a row, the question is no longer whether they are exceptional. The question is whether the business has quietly created a second pay structure for one individual without admitting it.

So the framework needs discipline: a small eligible population, capped award size, clear affordability limits, proper justification, and tracking over time. In practice, that usually means documented criteria, a formal approval process and retrospective tracking of both recipients and rationale.

The real question for reward teams

Most organisations already have a reasonable framework for recognising solid delivery. What many do not have is a clean and governable mechanism for rewarding the small number of people whose contribution genuinely changes the trajectory of the business.

That is the gap.

Solving it does not necessarily require bonus inflation across the wider population. Nor does it require a wholesale redesign of long-term incentives. Often, it just requires a more disciplined answer to a simple question: how do we reward exceptional people exceptionally, without repricing everyone else?

That is a conversation we are having more and more with clients. In the right context, a tightly governed, cash-based top-performer overlay can be a very effective answer.

At Burges Salmon, this is exactly the kind of reward design question we are increasingly helping clients work through: how to sharpen differentiation, support retention and recognise strategic contribution, while keeping the wider framework coherent, affordable and governable.