Align pay to performance with optimised executive incentives
Create a strategy to align executive pay to performance with an optimised variable remuneration incentive mix. GRG provide tailored executive incentive solutions across all types of incentive plan structures.
GRG assists with all types of Executive Incentive Plan structures
Short Term Incentives
Long Term Incentives
Hybrid plans
Executive incentives: amendments to the Corporations Act are a critical issue for ASX equity plans
Effective incentives help to focus executives and employees on the results that contribute to business success, and to align their behaviours with shareholder interests. Also, the “two strikes” rules on remuneration report voting makes the design of executive incentives a sensitive issue for ASX listed companies. Thus incentives are one of the most critical remuneration components that ASX companies must get right.
Amendments to the Corporations Act mean new compliance requirements have come into effect from 1st October 2022. In an update on 29th September 2022, ASIC announced that Class Orders 14/1000 and 14/1001 are available for new offers until 1 January 2023. All current incentive plans that use equity instruments should be reviewed and in almost all cases amended to ensure compliance with these new provisions during this transition period.
Speak to one of our consultants to understand if your current executive incentive plans need to be reviewed to comply with new regulations.
We take our clients from the initial exploratory and design phase through to drafting and TSR performance tracking
Executive incentive plans can be highly technical with increasingly complex governance and compliance issues to navigate. Our experienced consultants provide expert advice to optimise your executive incentive strategies, considering relevant remuneration fields such as company and taxation law, ASX Listing Rules, accounting standards, corporate governance and more. This provides you with a full end-to-end solution, from the initial exploratory and design phase through to formal executive incentive plan drafting. Every aspect of developing executive incentives is covered to provide a holistic executive incentives strategy, including:
Executive Incentive Advisory Report
Provided as a review of your existing executive incentive approaches, or simply a focus on current/emerging best-practices tailored for your business, GRG executive incentive advisory reports provide direction and advice as to how to align executive pay to company performance with optimal outcomes for both the employee and employer.
Executive Incentive Plan Drafting
Formal documentation is required to provide clarity to all stakeholders in a way that addresses incentive design preferences, as well as compliance to an ever changing governance landscape. Godfrey Remuneration Group (GRG) provides formal incentive plan drafting for both short-term and long-term as well as hybrid incentives plans, offering clients a comprehensive and integrated solution to finalise their executive incentive strategy.
Executive Incentive Plan Enablement – Approvals, Education & Communications
GRG provides all the necessary post plan design documentation needed to successfully implement and operate an Executive Incentive Plan. We help companies engage and effectively communicate with participants every step of the way; while assisting administrators, boards, and HR professions to stay on top of the complexity of required drafting requirements.
- Shareholder Approval – Notice of Meeting resolution drafting
- Participant Understanding – Face to face rollout and Executive Incentive Explanatory booklets. Critical to maximising employee comprehension of their Incentives while minimising the questions that HR need to address.
- Key Incentive Plan Event Communications:
- Invitation/Applications/Offer/Acceptance documents
- Grant, Exercise & Vesting Notice
- Cessation of Exercise Restrictions Notice
- Settlement Notice
- Cessation of Disposal Restrictions Notice
We also work with a wide range of plan administrators who can convert our documents into digital versions for online platforms.
Employee Share Trust (EST) Deed
An often-overlooked component that leads to many companies losing a tax deduction worth 30% of their Executive equity remuneration cost, or more when the share price is rising. ESTs may be run internally, or outsourced. Our deeds have been crafted with the benefit of working with a wide range of administrators and trustee service providers.
Further, GRG can provide TSR Quarterly Tracking & Reporting to assist in creating continued alignment and engagement with executives and their long term incentives.
Executive LTI Engagement Reports – TSR Quarterly Tracking & Reporting
The best way to engage executives with their LTI is to provide regular tracking, feedback, and clarity on their performance outcomes along-the-way. This is especially the case for TSR related metrics, which are the most common LTI performance measure across all equity plans used by ASX companies, which for many executives may appear to create an unclear link between performance and reward. That is until now. GRG provides TSR quarterly tracking which serves as a powerful engagement tool that helps top executives stay engaged with their LTI and empowers them to understand, engage with and influence TSR outcomes, and how it will impact their rewards.
Our Executives Incentives services
GRG’s services range from reviewing the effectiveness of current incentive plans to full incentive plan design and documentation.
Our bespoke STI and LTI services include
- Benchmarking and research of actual and target incentive market practices sourced from GRG’s largest ASX Executive remuneration database in Australia
- Developing incentive plans that focus employees and maximise their motivational impact
- Designing appropriate incentive profiles or mixes of for different organisational levels
- Defining STI plan Key Result Areas (KRAs) and Key Performance Indicators (KPIs) tailored to the context and circumstances of organisations at all levels
- Developing customised LTI metrics that are appropriate to the business context and aligned with shareholders’ interests
- Associations that create a team that can offer private tax rulings to maximise cost effectiveness and create incentives based on TSR Alpha™
- Managing good leaver and termination benefit issues as they relate to incentives
- Managing taxation issues as they relate to incentives
- Change in control provisions
- Return of capital to shareholders provisions
- Managing the issues associated with disclosure of accounting charges, given that the accounting charge is not reflective of actual incentives paid when market measures are used as the vesting condition (applicable to a majority of LTI plans).
