A More Informed View of Long Term Incentive

Issue: Senior Executive exit prompts a review

An important Senior Executive, earmarked for succession, has left for a Key Executive role elsewhere.

This unexpected exit has prompted the Board of this significant Listed Company to look at Senior Executive remuneration, including for the CEO, specifically the Long Term Incentive (LTI).

Brief: Seeking a better perspective on evolving LTI

The Remuneration Team is requested by the Remuneration Committee to look at the longer-term evolution of LTI practices.

In particular, to review organisations beyond their usual defined Peer Group to include companies that could be destinations for other Senior Executives, Current or Emerging.

Insight: A canary in the coalmine?

Initial project scoping determines a new Peer Group rather than the “Traditional Peer Comparators” is required for this LTI project. The Head of Remuneration realises a “possible destination” viewpoint delivers a more relevant project Peer Group of “Emerging Peers”. This is a significant evolution.

Approach: Broadening the LTI reference group

The Remuneration Team researches and develops a broader Project Peer Group from AscentData Direct than their narrower ASX Comparator Company List, with a – “possible destination” viewpoint in mind.

  • An expanded Company List – is requested from AscentData to add to their Direct Platform
  • Data is collated – with an initial data set compiled after running a range of on-screen views
  • Hybrid STI/LTI – are highlighted to avoid confusion
  • Once the data set is confirmed – an excel download then creates the project data set
  • The tailored data – is to gain further understanding of the design, and related strategy, of in-scope companies against Annual Reports using the bookmarking and search functionality
  • The Report – highlights the current and emerging LTI trends in both Traditional and Emerging Peers

Outcome: Depth of market data and challenging the status quo delivers evolutionary change

It is clear the current LTI plans against Traditional Peer Comparators have kept pace, however a broader group of Emerging Peers have arisen, with a wider range of LTI and reward options.

  • This report allows the Head of Remuneration to identify potential improvements in the current LTI
  • It provides the evidence needed to extend the Comparator Company List beyond the more traditional approach into a wider external reference group
  • This pre-empts a couple of other projects that are now seen as proactive rather than reactive
  • The Chair of the Remuneration Committee is pleased with the consultative approach and the evidence-based decision making on this project
Case Studies