Get valuable insights into KMP remuneration

At GRG, we can help you navigate the complexities of KMP remuneration. Our complimentary Remuneration Insights share the thoughts of some of Australia’s leading KMP remuneration consultants using our extensive Australian KMP remuneration database.

The Myth of CGT Tax Advantages

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It's a common misconception that capital gains tax (CGT) treatment produces a better outcome than the tax deferral through an Employee Share Scheme. Using worked examples, here we demonstrate that ESS tax can produce an outcome equivalent to an effective CGT rate of nil/0%.

Succession Planning

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Recent government legislation and regulations support succession planning by unlisted companies with the transfer of equity from existing owners to employees over time. Understanding these provisions and the methods of implementation allows a successful ownership transition without expensive external financing options.

Variable Remuneration: A Commentary on Market Practices

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Our 2020 GRG Variable Remuneration Guide analysed the short and long term variable remuneration designs and practices of companies in the ASX200. Unfortunately their practices do not always reflect the good governance and modern approaches to variable remuneration that we would expect from Australia's largest corporations. However recent encouraging signs include a rapid rise in the use of financial return metrics and the abandonment of SIPs.

How Have FY20 STVR Awards Gone So Wrong?

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The current COVID-19 pandemic and economic crisis have generated questions about FY20 STVR awards both in the media and for the current AGM season. Should STVR awards be paid? Should the quantum of STVR awards otherwise payable be moderated? How can companies that received government-funded JobKeeper payments still be paying executives bonuses? The logical answers can be derived from a review of the fundamental principles that should drive all STVR awards regardless of external circumstances.

Remuneration Benchmarking and Advice

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For some years ASX listed companies have been in a privileged position of having access to publicly disclosed remuneration data for KMP roles. However, using this data can be a burden so most companies rely on consultants such as GRG which have proprietary databases. However, not all KMP databases are equal. It is important to understand the differences so that you can have confidence in the data.

The Power of Deep Data

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Big data is arguably the buzzword of the decade, but its real power lies in how it's analysed and applied. As a case study, we use the latest market data from the largest database of KMP remuneration in Australia, to show how deep data that is also narrow can produce valid and reliable answers.

Remuneration and Financial Crisis Management

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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.

Buybacks and Executive Incentives

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Over recent years, many ASX listed companies engaged in share buybacks, and yet little (if any) information has been provided in Remuneration Reports on the implications of such activities on executive incentive plans. We discuss relevant aspects of share buybacks and raises some issues that may warrant consideration by Boards in relation to remuneration governance.

KMP Remuneration Issues for 2018

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2018 is shaping up to be a year of change in relation to key management personnel (KMP) remuneration. This GRG Remuneration Insight seeks to identify and comment on areas where change is underway or likely to occur in the next 12 months or so.

Making Employee Equity Plans More Attractive

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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.

Government to Make Employee Share Schemes User Friendly

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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.

Employee Engagement and Equity Participation

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“‘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.

Role of the Remuneration Committee

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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.

Retirement Savings – The Weak Element of Executive Remuneration

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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.

No Risk Salary Sacrifice Share Investments

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Pre-tax investment in company shares is now an even more attractive employee benefit due to an innovative new approach that: removes limits on the amounts that may be salary sacrificed; provides a guarantee of no loss even if the share price falls; and results in lower overall tax being paid.

10pc Shareholding Barrier to LTI Participation Overcome

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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.

Use of External Remuneration Consultants

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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.

Selecting Comparator Groups

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Selecting the companies to be included in a comparator group represents a significant challenge for many companies, with the primary criterion of the group being "fit for purpose". Here we discuss three other purposes relating to (KMP) remuneration being (1) external market benchmarking of KMP remuneration, (2) internal database composition and - for companies that use TSR - (3) long term incentive performance.

Case Study – Accessing Custom Data

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This case study examines the use of real external data by a newly appointed Remuneration & Benefits Manager who was asked to provide information on a market-competitive total remuneration package for the company CFO who was being replaced. Feedback from the manager was that the GRG database was the easiest to use of the many he had used over several years in similar roles.

New Employee Share Scheme Taxing Provisions Released

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On 14 January 2015 Treasury released for public comment drafts of proposed amendments and explanatory materials related to previously announced changes to the employee share scheme (ESS) taxing provisions. Submissions in relation to the proposed changes may be submitted until 6 February 2015. As the amendments are intended to come into effect on 1 July 2015 it may be anticipated that the amendments will be finalised and submitted to Parliament to be passed before the end of June 2015.