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.
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57Informing Board Discretion on LTI Vesting Using Economic Performance Measures
Feb 2014
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.
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56Board Discretion on LTI Vesting
Jan 2014
In light of the decision by the Board of BHP Billiton to reduce the level of vesting in relation to the 2008 long term incentive (LTI) grants that had a measurement period ending in 2013, this issue discusses the critical questions that need to be considered in relation to the exercising of Board discretion related to vesting of LTI grants.
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55A Value-based Perspective on Executive Incentive Plan Design
Nov 2013
Shareholder value is created when management either delivers performance in excess of market expectations, and/or when it convinces the capital markets that it has put a strategy in place that will enable it to do so. The article discusses the application of this simple tenet of finance in the context of setting goals and establishing business performance measurement systems particularly when designing executive reward plans.
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54Change in Control Provisions Need Review
Oct 2013
A change in control (CIC) event is often not well addressed in executive KMP employment contracts and plans rules for short term incentive (STI) and long term incentive (LTI) plans. For many companies there is a strong need to review CIC event provisions. Such reviews should be undertaken well before a CIC event is likely to occur.
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52Treating “Good Leavers” Badly
Aug 2013
One of the surprising findings from research reported in the 2013 GRG KMP Incentives Guide is that most companies appear to be exposing executive KMP who are “good leavers” to reduced benefits on cessation of employment including reduced STI payouts and lower or nil vesting of LTI grants. This issue needs urgent attention.
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50Company Aligned New Incentives
Jun 2013
In December 2012 Blackrock released a paper titled 'Time to Rethink Executive Incentive Programs'. It was critical of many incentive plans being used for executives who are KMP, and suggested that companies were not designing incentive plans to suit their specific circumstances. This paper discusses three companies, namely Macquarie Group, Seek and Tatts Group, that have or are considering adopting different approaches to KMP incentive remuneration.
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49Clawback of Overpaid KMP Remuneration
May 2013
Released in December 2012, 'Corporations Amendments – Improving Disclosure Requirements' recommended a clawback of remuneration overpaid to key management personnel (KMP). The topic remains relevant due to many companies already having introduced clawback policies.
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44Remuneration Profile Review
Dec 2012
Remuneration profiles reflect the proportions of remuneration that are expected to arise for different elements of remuneration at different levels of performance. These proportions may vary for different categories of employees. We canvass the main types of Remuneration Profiles and discuss when they may be relevant.
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43TSR Assessment for LTI Purposes
Oct 2012
Boards have great difficulty in selecting the approach to be applied to assessing TSR performance. It is important for the TSR assessment approach selected to be directly aligned with shareholder/investor expectations so that vesting can be calibrated to those expectations. In the Remuneration Report the vesting of LTI grants and company performance should be shown to be in alignment.
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42PEPOs Unexpectedly Face FBT
Sep 2012
The Australian Taxation Office ATO has recently released an interpretation of the taxing laws which accepts that such PEPOs have a no taxable value for ESS taxing purposes but maintains that they are not exempt from fringe benefits tax (FBT) and have an FBT taxable value for which companies are liable for FBT.