Financial/Dilution Modelling
The cost of a remuneration policy (particularly the accounting cost of share plans) is another key issue. A number of our consultants are qualified accountants who can construct financial models to show the cost impact of a pay policy and provide IFRS 2 share award valuations.
Please try our Black-Scholes Calculator* to give you a broad valuation of the “fair value” of an award (excluding any impact of performance conditions).
With regard to performance conditions, almost all long-term incentive plans for executives incorporate such conditions, often based on a company’s total shareholder return (share price growth and dividends) performance relative to a peer group or its earnings per share growth.
In order to ensure that these plans are relevant and valued by executives, companies need to provide regular, clear communication of on-going performance against their performance conditions. Remuneration Committees also generally require independent verification of performance and the extent to which awards can vest.
We currently provide a performance monitoring service for total shareholder return / share price performance conditions for over 80 companies. Further information on this service can be obtained from your usual contact at New Bridge Street. A couple of examples of the sort of information that we provide to companies to help them communicate with their executives are.
*Disclaimer
The Black-Scholes calculator is intended for educational purposes only. The results obtained from using the calculator are not to be taken as a recommendation to buy, sell or trade any particular security of any kind.