Retaining the right staff with the right rewards
Share-based payments are common practice in businesses around the world which are formulated by corporations to incentivise their staff members. Many entities grant shares or share options to their employees, and remuneration packages often include share plans and share option plans for directors, senior executives and other employees. There are a number of types of long and medium-term share incentive schemes which are commonly issued by companies and referred to by different names including:
Share Appreciation Rights, Performance Share Plans, Share Options Schemes, Bonus and Deferred Share Plans, Conditional and Forfeitable Share Plans, Restricted Share Plans, Phantom Share Schemes, as well as many variations of these.
In order to align staff behavior to the objectives of the company, the number of awards which ultimately vest to each employee may be linked to the performance of the company. These performance conditions which are attached to the awards, either pertain to the performance of the company in terms of its market share price performance (e.g. the performance of the share price in relation to peer companies' share prices) or its company-specific performance (e.g. to target levels of HEPS).