Executive Schemes
The two principal methods of delivering value to executives is the provision of shares and cash. It is a general rule that you can adopt the same structures to deliver either cash or shares. Halliwell Consulting designs, implements and advises on all forms of executive schemes. We provide these services both in the UK and Internationally through our network.
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Short-Term
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Long-Term
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Cash
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Annual Bonus Schemes
- Based on one year's performance.
- Performance measures are normally profit, revenue or earnings per share.
- Payments may be made in cash, shares or a combination of both.
- Do not normally require separate shareholder approval.
- Will be part of the remuneration committee report voted on under the new legislation.
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Phantom Options
- The executive is awarded the appreciation in value of a company's shares from the date of grant to the date of exercise in cash.
- Normally has the same terms as options.
- Often used where there is no market in the shares or where securities issues make the use of shares difficult.
- Will generally require shareholder approval.
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Shares
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Deferred Share Bonus Plans
- Normally linked into the annual bonus plan.
- Part of the annual bonus is deferred in shares.
- The Company provides matching shares to the executive at the end of three years subject to the satisfaction of conditions.
- In accordance with current ABI guidelines will normally require shareholder approval.
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Options
- A right granted to an executive to acquire shares, normally at the price on the date of grant.
- Common conditions are:
- A three year period before options can be exercised.
- Performance conditions such as earnings per share which have to be satisfied before an option can be exercised.
- Will require shareholder approval
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There are a number of tax approved structures in the UK and Internationally. UK examples include:
Restricted Share Schemes
- A conditional right granted to an executive to receive shares at a point in the future.
- Standard conditions are a three year holding period and performance conditions.
- Performance conditions tend to be more varied than for options examples include:-
- Comparative total shareholder return.
- Profit.
- Revenue.
- Share price growth.
- Earnings per share.
- Combinations of the above.
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