126Equity Remuneration in Micro Resources Companies
Since 2015 unlisted start-up companies have been able to access a specific tax concession for employee share schemes. Employees and directors of ASX listed Micro Resources Companies can also qualify for tax deferral on rights and options in their remuneration packages. The same provision can also apply to other small ASX listed companies in industry sectors such as technology and medical, during development stages.
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.
118Demergers & Long Term Variable Remuneration
Rarely do the rules governing long term variable remuneration (LTVR) plans specifically cover demerger or return-of-capital situations. In this Insight we identify various demerger situations and the principles that should inform possible approaches for consideration by boards under competing pressures from employees, governance commentators, and buyers of the demerged entity.
108Telstra – A Case Study in Misalignment
Despite making significant changes and disclosures in a desperate attempt for damage control, Telstra recently received what looks to be a record strike against its Remuneration Report for an ASX 50 company. How could a company so widely held by retail shareholders, self managed super funds and major institutional investors end up in such a position?
107Buybacks and Executive Incentives
Sep 2018Over recent years, many ASX listed companies engaged in share buybacks, and yet little (if any) information has been provided in Remuneration Reports on the implications of such activities on executive incentive plans. We discuss relevant aspects of share buybacks and raises some issues that may warrant consideration by Boards in relation to remuneration governance.
Change-of-Control (CoC) provisions are essential in both short term incentive (STI) and long term incentive (LTI) plans. Should the CoC provisions be more prescriptive in documentation on short term incentives? What factors should Boards consider when navigating through stakeholder interests to arrive at a discretionary outcome?
105Variable Pay – Victim or Villan?
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has stirred adverse commentary about the role of variable pay in influencing key management personnel (senior executives and non-executive directors) and others to behave unethically, even criminally. But how valid are these opinions?