Tracking and/or Administration for Performance-Based Long-Term Incentives
Hi All:
We're seeing a significant rise in the use of performance-based long-term incentive plans such as performance-accelerated stock options (PASOs), performance contingent restricted shares or RSUs (PCRS), formulaic performance shares, performance units, etc., usually part of a defined omnibus equity plan.
Our question to the group is:
- What is/are your company/clients using to track plan metrics for vesting of the vehicles(s), (e.g., share price vesting hurdles for options and/or restricted stock/RSUs;
- Ongoing valuation of formula based plans (performance shares, units, etc.); and
- Administration of the plan(s), both equity and/or cash-based.
This would apply to both public and private companies.
Thanks Much,
Frank Glassner
fglassner@cdgworldwide.com
| Topic | Replies | Likes | Views | Participants | Last Reply |
|---|---|---|---|---|---|
| Tax Return Extensions | 1 | 0 | 289 | ||
| New CEP CE Course on Taxation | 0 | 0 | 210 | ||
| Tax Return Changes & Reporting Resources Related to Stock Comp | 0 | 0 | 253 |
A couple of comments --
1. Mid-market private companies in our market are complaining of the need to formalize annual valuations as they build performance based vesting triggers
2. Retail banks in our client list are tying vesting triggers to short-term incentive metrics - including opening new units and growing high value loans -
3. The few mid-market mineral and extraction publics in our client list are using share price alone as the performance based trigger for vesting -- one Toronto exchange client is putting close to 90% of vesting on what they consider a stretch share price increase - mirroring a carried interest plan
Bill Heck
Harlon Group
Hi Frank,
We currently do not have any performance based LTI, but are thinking of the idea of Performance Shares for certain levels/groups within our company, more as a possible overlay to our current plan. So I would be interested to hear the responses you recieve regarding this.
Our current annual equity program includes the granting of NQSO and/or RSU's granted annually with a performance metrix of an individual component & company component.
-Meaghan M
Hi Bill:
How are the client companies administering the plans?
Thanks Meaghan!
How does your company administer the plan(s) currently?
Is the performance-based vesting tracked and handled manually, or is it part of your administrative software package? Which software do you use?
Best.
Frank
Frank,
As far as administration of the plan, that would be myself & an excel spreadsheet! :) The vesting of our annual equity awards is not performance-based vesting, we just use a typical time base of 4-year (25%/year) vesting.
The only performance aspect would be individual performance rating can sway your equity award target one way or another.
(i.e. - if your target was 500 RSU's based on your grade level within the company, and you received a above average rating, then you can get up to 1.25x your target.)
-Meaghan
Frank
Thanks - yes, the real question - answer is somewhat obvious in the middle of the country in mid-market countries - tracking by spreadsheets maintained by controller / inv relations / with quarterly reports to senior management and board --
Interestingly - banking clients come forward before others asking for third party administration
I have wanted to stay out of this conversation for a while since my response seems a bit self-serving on a web site created by me. For that, I apologize. This forum, however, is designed to discuss solutions so I thought I might chime in.
My firm is just weeks away from releasing GEMS (Goal-based Equity Management Solution), our new performance-base equity tool. This tool will fit between compensation departments and stock administration software. It is designed to store and track complex performance metrics and criteria. GEMS will provide a level of performance support not yet seen for our industry.
It allows companies to set up KPI (Key Performance Indicators) and create an infinite number of Scorecards that can be applied to shares, units, options and, of course, cash.
Please contact me directly, dwalter@performensation.com or 917-734-4649, if you would like to know more about GEMS. I will post something in the files section once the release has occurred.
Is there any more information from the group regarding Performance-based equity programs?
We have a small number of performance based RSUs. Tracking of the goals is not hard since they are fairly simple (tied to financial results) and there are few vesting dates. However, the measurement date for each tranche is after the grant date. We use EquityEdge and this software does not seem to permit that. Thus, we are tracking the compensation expense in Excel. Also, computing the RSU dilution for weighted average share purposes is difficult in EquityEdge (although possible through a work-around).
Has anyone come across stock admin software that can handle a measurment date after the grant date? I hear EASi may be able to handel this, but have no experience with it.