SIPs may at first glance seem to offer less complexity and more certainty than commonly accepted STI and LTI plans, but they are actually more complex and lead to lower payments for executives who achieve target performance.
There is now a need to seek alternative sources of current remuneration data beyond the ‘disclosed’ to include the ever-growing population of non-disclosed executive data. We compare the five main approaches to populating remuneration databases in which client companies can have a high level of confidence.
High-potential, cash-limited ASX listed companies need to efficiently compete for talent at all employee levels without the ESOP start-up tax concessions available to unlisted companies. A tax-efficient, cost-effective alternative is granting Premium Exercise Priced Options (PEPOs).
In 2022, hastily drafted amendments to the Corporations Act tried to address long-standing problems with the regulation of Employee Share Schemes (ESS). The new Division 1A of Part 7.12 only partly succeeded. After lobbying by GRG and others, substantial changes were made. This insight provides a summary of the final framework and key outcomes, actions and issues.
Boards are always in a conflicted position with remuneration. NEDs are both the decision makers and the beneficiaries of those decisions, while they must consider good governance and their legal obligations. This Insight discusses why boards must receive fee recommendations from an independent remuneration consultant.
Two key components of annual KMP remuneration reviews are information on current market practices – so directors know the environment and can be confident they've acted reasonably – and recommendations from independent remuneration consultants (ERCs). This Insight discusses these and other issues critical to remuneration reviews.
Options, SARs and SPLPs are valuable instruments for companies expecting significant future share price growth. However recent updates to ESS provisions reclassify them as “contribution plans" imposing strict limits and significant regulatory and disclosure requirements. Any company currently operating or considering an option plan should look at switching to SARs.
This Insight discusses various recent views on NED equity holding policies such as the "2 in 2"; that equity interests must be purchased on joining the Board, possibly with an interest-free company loan; the consequences of misconfiguration of NED equity; and undermining NED independence through the use of options.
When offered to executives, retention and sign-on awards can be viewed as controversial and even inappropriate. With the latest market data we explore the resultant stakeholder tensions and variations which may address their diverse priorities.
Each year GRG analyses the senior executive incentives practices of the ASX300 and publishes the results in the Variable Remuneration Guide to help clients determine whether a deeper strategic review may be needed. We highlight some of the key findings from the latest edition.