85Who are KMP and Why?
The apparent division into two compliance camps of Remuneration Report disclosure of KMP remuneration stems from classification of some executive roles as KMP and others as not. We offer clarification of, and guidance on practical application of, this classification.
84Using Terminology to Improve Communication
Use of imprecise terminology in engagement letters, policies, plan rules and Remuneration Reports often leads to a lack of clarity regarding intended total remuneration packages (TRPs). Poorly expressed engagement letters can create friction over different interpretations of the intended TRP outcomes, and imprecise expressions of policy can lead to concerns amongst shareholders and proxy advisers. We propose terminologies that should alleviate these problems.
83Role of the Remuneration Committee
This Insight discusses the need for Remuneration Committees and their role in compliance, governance and value creation for shareholders, in the context of ASX listed companies.
82Retirement Savings – The Weak Element of Executive Remuneration
For all employees and particularly executives, superannuation fails to meet retirement saving needs and no other element of remuneration focuses on this need. Retirement savings is the weak element of executive remuneration and is such a critical issue for most executives that it should no longer be ignored.
8010pc Shareholding Barrier to LTI Participation Overcome
We describe an approach that can allow executives with large shareholdings in their company to participate in an LTI plan on the same basis as other executives and yet not be liable for tax on the value of unvested LTI at the date of the grant.
79Retesting Long Term Incentives
Retesting of long term incentives (LTI), where executives are given more than one opportunity to meet LTI vesting conditions by changing the measurement period, has not been well regarded by external stakeholders for some time. However, with stakeholder groups calling for LTI measurement periods to be extended beyond three years, an unexpected compromise has emerged, and it involves retesting.
78Use of External Remuneration Consultants
GRG has over recent years been recording information disclosed in Remuneration Reports on the use made by ASX listed companies of external remuneration consultants (ERCs). We present some of the data analysed and provide commentary.
77Discussion of TSR Alternatives
Total Shareholder Return (TSR) has become an essential vesting condition for long term incentive (LTI) grants of equity units because it effectively aligns the interests of both management and shareholders. Here we discuss three ways in which TSR may be used as a vesting condition: absolute TSR, relative TSR using a comparator group of companies, and relative TSR using an accumulation index as a benchmark (not ranked).
76Executive Remuneration Governance
Increasing regulation, scrutiny and activism in relation to key management personnel (KMP) remuneration in listed companies has been a growing issue for boards. We summarise some underlying principles that can be broadly applied to, and documented by, the majority of ASX listed companies.
75Incentive Performance Targets
We canvas the considerations that need to be taken into account when setting targets for remuneration and aim to develop a consistent, defensible and logical process for target setting as part of the senior executive remuneration process.