Our Insights on: remuneration policy & market competitiveness; benchmarking; two strikes risk assessment and advice; competitor analysis; incentive design & documentation; regulatory issues management; termination provisions & integration.
124Rights Plans Better than Share Purchase Loan Plans
Share Purchase Loan Plan (SPLPs) are often believed to be more tax efficient for executives than Rights Plans, because SPLP share price gains are generally 50% capital gains tax free whereas Rights are 100% taxed under the employee share scheme (ESS) taxing provisions. We debunk that commonly held belief.
123Remuneration and Financial Crisis Management
No business will be immune from the adverse effects of COVID-19 beyond the short term. Lessons from the Global Financial Crisis, as well as innovations since, can be drawn upon. We explore the key governance and practical issues for remuneration to be considered by boards and executives in times of tight cash flow. There is even a golden wealth creation opportunity for those with a modern rights plan.
Properly weighted LTVR plans can facilitate longer term holding of equity interests by executives, but most are structured to neither assist nor compel executives to retain the equity earned. We examine practical optimisations of LTVR plans to achieve more “skin-in-the-game” for senior executives.
120Unlocking the Secret to Long Term Alignment
Executives retaining large equity holdings in their employers promotes genuine long term alignment. However the many obstacles to this encourage the disposal of equity as soon as it vests to pay down an unnecessary tax liability, exposing them to ASIC scrutiny. We identify the obstacles and offer practical solutions for long term equity holding by KMP.
103Rethinking Executive Remuneration
Co-written with the KBA Consulting Group, this important Insight offers an in-depth overview of executive reward. In many vital respects, the current paradigm fails both shareholders and executives, as creating shareholder wealth is often confused with maximising short-term profits. The economic interests of executives need greater alignment with the long-term best interests of their company, its shareholders and its many other legitimate stakeholders. We look at SIP, with Wesfarmers as a case study, and explore better alternatives.
82Retirement Savings – The Weak Element of Executive Remuneration
For all employees and particularly executives, superannuation fails to meet retirement saving needs and no other element of remuneration focuses on this need. Retirement savings is the weak element of executive remuneration and is such a critical issue for most executives that it should no longer be ignored.
68New Employee Share Scheme Taxing Provisions Released
On 14 January 2015 Treasury released for public comment drafts of proposed amendments and explanatory materials related to previously announced changes to the employee share scheme (ESS) taxing provisions. Submissions in relation to the proposed changes may be submitted until 6 February 2015. As the amendments are intended to come into effect on 1 July 2015 it may be anticipated that the amendments will be finalised and submitted to Parliament to be passed before the end of June 2015.
63Short Term Incentive Fundamentals
The level of understanding of when an STI should be used and how its design features should be constructed seem not to be well understood by many stakeholders. Here we seek to provide clarity as to the fundamentals of STI plans. The market practice information quoted has been extracted from the 2014 GRG Incentives Guide.
59Major Changes to the Remuneration Landscape
There are a number of significant changes occurring in the key management personnel (KMP) remuneration space that remuneration committee members, remuneration professionals and company secretaries should be aware of, as the changes are expected to influence the way executive and director remuneration is designed, governed and communicated.
57Informing Board Discretion on LTI Vesting Using Economic Performance Measures
This issue contains very useful information on exercising Board discretion in relation to vesting of LTI grants. Sophisticated financial analysis was undertaken in relation to this issue, and we present the insights that arose from it.