Flaws in many of the various calculations of equity instruments for LTI grants result in inappropriate numbers being granted. To address the issue, GRG has developed a universal formula for this calculation, applicable to LTIs and other purposes.
Common traps, missed opportunities and issues often make ESOPs seem harder and more expensive than they need to be, and undermine their impact. Fortunately, a range of simple, cost-effective solutions make ESOPs and equity-based remuneration the most attractive form of remuneration.
Benchmarking KMP remuneration may seem like a simple process, but it can quickly and easily go wrong. We set out four pitfalls to avoid when benchmarking in 2022, using the example of a fictitious online electronics retailer, Nogan Limited.
STVR typically rewards performance over a single year of the company's annual business plan. For many years it was paid entirely in cash, which promoted short-termism at the expense of the company's longer-term benefit. Here we look at future best practice, including how deferring STVR can support long term alignment, equity holding policy requirements, and “skin in the game”.
In the 2021 Federal Budget, it was announced that for ESS taxing purposes, termination of employment will not be a taxing trigger point for grants made on or after 1 July 2022. This small change will significantly affect the design of rights plans relating to LTVR, STVR deferral and retention programs.
It's a common misconception that capital gains tax (CGT) treatment produces a better outcome than the tax deferral through an Employee Share Scheme. Using worked examples, here we demonstrate that ESS tax can produce an outcome equivalent to an effective CGT rate of nil/0%.
During 2020 there was heightened public debate about instances of remuneration practices that did not seem to be reasonable and did not meet the requirements for shareholder approval. This responsibility rests with the Board – and breaches can lead not just to reputational damage but fines and disqualifications.
It is difficult to stay on top of all the rules, regulations and guidelines that need to be understood to effectively govern/oversee KMP remuneration. GRG’s complimentary Remuneration Committee Companion is designed to help you stay ahead of these issues and avoid the pitfalls.
Recent government legislation and regulations support succession planning by unlisted companies with the transfer of equity from existing owners to employees over time. Understanding these provisions and the methods of implementation allows a successful ownership transition without expensive external financing options.
Our 2020 GRG Variable Remuneration Guide analysed the short and long term variable remuneration designs and practices of companies in the ASX200. Unfortunately their practices do not always reflect the good governance and modern approaches to variable remuneration that we would expect from Australia's largest corporations. However recent encouraging signs include a rapid rise in the use of financial return metrics and the abandonment of SIPs.