A mutual organisation wished to benchmark top executive and non-executive director remuneration practices against market practice and to implement an executive long term incentive (LTI) plan. After considering the types of organisations from which their talent had been sourced and to which they could be at risk of being lost, it was agreed that the most relevant comparator group was of ASX listed companies having operational characteristics similar to the mutual and being comparable in terms of revenue and assets.
GRG benchmarked the top executive and non-executive director roles using the same comparator group. As a result recommendations were present as to the quantum of Base Packages and total remuneration packages for target performance. The recommendations included the quantum of STI and LTI for different executive levels within the mutual. Part of the analysis revealed that the mutual operated much the same as a listed company except that profits were not distributed in the form of dividends but in the form of discounts and services. To remain a financially healthy mutual and to grow their offerings to members it needed to be financially successful and to grow its profits each year. An LTI plan was introduced in the form of a Rights plan which had many characteristics similar to those of a Share Right plan in an ASX listed company. Of course, there was no share capital and therefore the value of the rights has to be determined independent of the stock market. In addition to financial metrics the LTI plan took account of other factors that were particularly important to the mutual such as member satisfaction.