95Making LTIs More Relevant to Executives
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.
94Making Employee Equity Plans More Attractive
Other than superannuation, which has many limitations, a General Employee Equity Plan (GEEP) is the only benefit which companies can offer their employees to help put them on the road to financial security. When properly structured, GEEPs can provide employees with the powerful benefits of compounding, which is the foundation of wealth accumulation.
93Boards are Underpaid
Our own analysis indicates that fees paid to NEDs are significantly lower than their executive counterparts. Although boards have been reluctant to tackle this issue, it is an important one given the value-add now expected of NEDs, their increased workloads and personal risk exposure.
92Enhanced LTI Disposal Restrictions
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.
91Government to make Employee Share Schemes user friendly
The Government has recently released a consultation paper seeking comments from the public on changes to the Corporations Act disclosure regime that would make employee share schemes (ESSs) more user friendly. We provide context for the main areas that appear to require change, and our vision of a framework that genuinely supports equity ownership by all employees.
90Soft Non-Financial Targets for Incentives
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.
89Employee Engagement and Equity Participation
“‘Caring’ and ‘sharing’ are concepts that attract minimal interest among many managers, who tend to see people as workers rather than workers as people … yet I have found that such concepts, practised in good faith, are powerful in their impact, particularly when productivity gain is seen not as a goal in itself but as a means to enhance life for all.” — Mr Dick Dusseldorp AO, CEO Lend Lease Corporation Limited. We reflect on how this philosophy may be applied in today’s regulatory environment to improve employee engagement, participation and company performance.
88Remuneration Paid in Equities for Non-executive Directors
Significant equity holdings by NEDs in companies where they are on the board is a tax-effective way of ensuring strong alignment between their long term interests and that of shareholders. If they do not have one, all ASX listed companies should consider introducing a NED equity remuneration plan and potentially an equity holding policy.
87Board Membership Profiles and Fees
We present information on market practice in relation to the composition of boards between executive directors (EDs) and non-executive directors (NEDs), as well as the mix of male and female directors. We also discuss NED fee levels and aggregate fees limits (fee caps) and their relationship to the number of NEDs on boards.
86ASX200 Incentive Plan Practices
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.