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104BEAR: Concerns With Variable Pay Deferral
Mar 2018
This Insight contains the contents of a letter sent to Mr Wayne Byres, Chairman of the Australian Prudential Regulatory Authority, expressing concern over the variable pay deferral aspects of the BEAR legislation, and the need for it to be amended or clarified via APRA determinations.
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101Are You Prepared for the BEAR?
Jan 2018
The Banking Executive Accountability Regime (BEAR) is likely to be passed quite soon by Parliament. It will apply to Authorised Deposit-taking Institutions (ADIs) including banks and credit unions and, potentially, insurers and superannuation funds. The legislation is in many respects less than clear, particularly with regards to remuneration. How boards interpret the policies and procedures will affect their exposure to risk of breaching the BEAR requirements.
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100Short Termism and the Threat Posed by an Absence of Clear Thinking
Dec 2017
The evidence is clear: successful companies that create ongoing shareholder wealth are focused on the long term. Performance management processes and executive reward plans need to reflect this by avoiding the encouragement of short-termism, even inadvertently.
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99Does Deferred/Held Equity Give Better Alignment than LTI?
Nov 2017
Some companies appear to be replacing LTI plans by requiring executives to defer a substantial part of their STI earnings into equity that must be retained for several years. We explore the significant defects of this approach, especially via the implementation of Single Incentive Plans (SIPs, sometimes referred to as Total Incentive Plans).
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98Are STIs Working?
Sep 2017
To settle some recently reprised myths about STI awards, we recently analysed remuneration disclosures from the ASX 300 2016 Remuneration Reports. A lack of understanding by most commentators is made worse by unclear communication and disclosure by some companies. Boards can resolve this public furore by explaining more clearly how incentives are intended to work, and why.
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97ASX300 Incentive Practices
Aug 2017
This Insight summarises and comments on the incentive practices of companies in the ASX300. The data was extracted from FY16 annual reports. As change in the incentive area tends not to be rapid, companies can be confident that this data is reflective of current practices.
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95Making LTIs More Relevant to Executives
May 2017
The emergence of Total Incentive Plans (TIPs), which resemble STI plans with a deferred element, has spotlit the disengagement of executives who do not fully value the LTI element of their remuneration packages. Here we identify the underlying reasons for this and propose changes to increase their engagement.
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92Enhanced LTI Disposal Restrictions
Jan 2017
Some CEOs of ASX listed companies have sold LTI shares prior to the disclosure of information that led to declines in their share prices. It seems timely to review deficiencies in the design of LTI plans which allow the sale of LTI shares as soon as they have vested.
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90Soft Non-Financial Targets for Incentives
Oct 2016
The increase in the use of “soft” non-financial metrics for senior executive incentive purposes has, unsurprisingly, attracted significant stakeholder backlash. Boards will be required to reassess this practice sooner rather than later to avoid further criticism, negative press and even legislative regulation.
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86ASX200 Incentive Plan Practices
Jul 2016
We analysed the STI and LTI practices of ASX200 companies for the GRG 2016 Incentives Guide. ASX200 companies employ large numbers of staff, and effectively set the market for remuneration practice, are usually leaders in corporate governance and are sometimes adopters of new practices. Our key findings are relevant to companies of all sizes.
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GRG is a consulting firm that exclusively advises employers on employee pay and incentives for non-executive directors, top executive directors and other employees. GRG does not provide personal financial product advice and does not advise individuals or consumers of investment advice or the management of financial products such as shares or interests in superannuation funds or managed investment schemes.