Dear Santa: a Data Entry Wishlist

Dear Santa,

Egan Associates' Santa Letter

Did you read my letter last year? Let me refresh your memory. I’m the hard working data entry elf. I didn’t ask for much. Just simpler, informative and easy-to-read remuneration reports.

Unfortunately, the abomination of remuneration is killing my concentration. And it’s leading to obfuscation of information! It’s time for some clarification.

So can you please, please, please pass on my Christmas wish list to all Remuneration and Nomination Committees, so they can all be on your “nice” list:

Keep Titles Simple – I know it’s tempting to give an employee a sparkling new title to make them feel better about themselves. But I have to sniff out these faux role changes, and I’m telling you, my ESP isn’t getting any better with age. Plus, when people come to us to benchmark their “Director of all things cool and wonderful”, the first question has to be ‘What, pray tell, do they do?’ (By the way, a Director with that title once existed. No joke.)

Disclose Position Locations – No one thinks executives are paid the same whether they work in Australia or they’ve been relocated to the deepest darkest mining region in Africa, Brazil or Mongolia. So it’d be nice if we weren’t kept in the dark about where executives and Directors are based.

Simplify Plans – Breathe deeply, because I’m about to bust one of the most ingrained myths of the remuneration world. There is no prize for the most convoluted incentive scheme. There. I’ve said it. So now everyone knows, can you all stop trying to win it?

Explain Plans – Having said that, I also understand that organisations are like snowflakes – none are the same. They need to provide tailored incentives for their executives. But keep in mind that whatever form your LTI equity plan takes, you need to answer certain questions: what instrument is granted under the plan? Does the plan have a pre- or post-allocation hurdle? What are the hurdles (for which proportion of the grant) and the vesting schedule? What is the performance period of the plan? Are the shares held/restricted after the performance period? What is the allocation method? What is the grant date, number of units, price and vesting date?

Label Plans Clearly – Incentive plans are not Rudolf’s mystery treats. It’s better to label them well to prevent confusion between legacy and current or indeed proposed plans (to be put to shareholders at the next AGM).

Don’t Create a Treasure Hunt – That smile you get when you and your kids search under the tree for the Christmas present Uncle Marty hid? It’s not replicated when I have to search for information that has been haphazardly strewn through the remuneration report. It might seem logical to you to put the number of shares granted under the LTI plan in a footnote to the statutory remuneration table, but it makes me want to invoke Donner and Blitzen.

Kind Regards,

Your loyal EA Remuneration Report Data Entry Elf

P.S. – At least organisations seem to be getting the hang of maximum and target STI – a sign someone’s listening after all.

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