Long Term Incentives

Long term incentive plans form an integral part of director and executive pay. However, in view of the recent corporate governance scandals in South Africa and abroad, director and executive remuneration have been place under increased scrutiny. In most cases, long-term incentives are based on equity schemes which are subject to potential dilemmas since these schemes may dilute the holdings of existing shareowners. In addition, the size of the incentive should be linked to the value that the particular executive creates for shareholders. More dilemmas are that share options must be reflected as an expense on the income statement, without any tax deduction, and that it is difficult to value the equity in private companies.

Clé Human Capital has the ability and professional expertise to assist with the design and implementation of an effective long term Incentive Plan. Our methodologies and approaches include schemes based on equity or cash and we welcome the opportunity to discuss the best fit for your organisation.

For more information on long term incentives please contact one of our remuneration consultants.

 "an effective long term incentive balances the needs of both shareholder and employee and rewards executives for long term value creation"