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.
121The Equity Holding Trend
An emerging corporate practice is the imposition of minimum equity holding guidelines, "equity holding policies", on NEDs and senior executives. But all are not equal, and most do not deal with failure to comply or enforcement. We explore some key variables in the development of these policies and how they may be improved.
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.
119A Question of Independence
In the light of the Hayne Financial Services Royal Commission, we explore what it means to be independent, and reflect on what it means for our own services and clients.
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.
117Double Standards in KMP Pay: NED Fees
Over recent years NED fee increases have not kept pace with the fixed pay of senior executives, or even general employees. Companies that have not introduced NEPs will soon need to make increases to NED fees significant enough to attract attention.
116Optimising Your Remuneration Report
We look at the best Remuneration Reports observable in the market; hot trends; strategies to manage all the stakeholder pressures; how to streamline the report and ensure compliance – while managing strike risks by maximising votes.
115The Missing Piece
Despite the bulk of the day-to-day execution and monitoring that impact business results being done by middle management and lower level employees, most employee remuneration systems reward the short term only. The "missing piece" might be the transformation of employees into shareholders, encouraging a longer-term view.