What role should incentives play in rewarding senior management?
Boards, shareholders and proxy advisers are increasingly engaged in oversighting any company activity which fails to account for its exposure to risk, including short term incentive plans.
Listed companies adopting deferral as an element of their annual incentive plan use varying equity instruments to match the deferral incentives.
Analysis of the top 100 Australian companies by market capitalisation at 31 December 2014 has shown that over half of the CEOs received at least their target STI payment for the 2014 year.
Many executives fail to consider the possible upside arising from STI deferral into shares or share rights.
Companies are still confusing maximum and target when disclosing potential payments under their annual incentive schemes.