2020 Trends in Long-Term Incentives

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2020 Trends in Long-Term Incentives

Analysis on ASX-Listed Companies

Deloitte has identified key trends in long-term incentives as well as emerging challenges that Australian companies face in designing incentive plans for key management personnel.

We have analysed market trends and the use of RTSR as a performance measure in LTI schemes. More than 40% of ASX 200 companies have made Covid 19 adjustments to executive remuneration schemes.

RTSR remains the dominant performance hurdle. 82% of companies in the ASX 100 use RTSR as a performance measure.

Australian Boards’ are increasingly shifting RTSR comparator groups to include sector specific entities, and international peers where appropriate.

Whilst RTSR aims to strengthen the alignment between executive remuneration and company performance, there are considerations which if overlooked can have unintended consequences and alter payouts.

Common TSR design and calculation pitfalls include:

  • Selection of an appropriate comparator group
  • Treatment of international peers
  • Treatment of dividends
  • Treatment of capital events
  • Appropriate averaging periods.

Published: December 2020

2020 Trends in Long-Term Incentives

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