Incentives

 

Incentives (Short-term and Long-term)

Emergence Growth is able to both design and review your short-term incentive schemes (applicable for schemes payable up to 1 year). These schemes typically take the format of:

• Bonus schemes
• Profit share schemes
• Commission schemes
• Gain share schemes

The purpose of short-term incentives (STIs) is to

• Attract and retain participants as part of a market related and competitive package
• Reward participants directly for individual, team and organisation performance achieved over a monthly, quarterly or annual time frame
• Support the achievements of the tactical and strategic objectives of the organisation by influencing the appropriate behaviour of the participants

The role of any incentive scheme must be clearly specified in the reward strategy:

• Variable pay should be an incentive (over and above guaranteed pay) or pay could be at risk
• All schemes should however be clear about the link between the value drivers of the business, the incentive pool generation and distribution of the pool
• The organisation must have a clear idea as to the incentive schemes value contribution towards business results
• Incentive schemes should motivate and engage employees

Our incentive scheme designers have effectively designed schemes in place in a number of organisations, ranging from FMCG to Financial Services.

Long-term incentive

Emergence Growth is able to both design and review your long-term incentive schemes (applicable for schemes payable over 1 year). These schemes typically take the format of:

• Share schemes
• Deferred banked or rolled incentives
• Preferred compensation
• Retirement funds

The primary purpose of a long-term incentive is to:

• Attract and retain participants as part of a market competitive package
• Reward participants for medium – to long-term organisation performance or outperformance
• Align management with shareholder or stakeholder interest

The design phase should include:

• A review of local best practice
• A review of global best practice
• Consultation with participants and Remuneration Committee members
• Consideration of taxation matters
• Consideration of accounting matters
• Consideration of statutory matters – for example the Companies Act and the JSE Listings Requirements
• Financial modelling of the probable costs to the company and benefits to participants of initial and subsequent grants
• Drafting of a recommendation report that documents the above matters
• Drafting of the rules, salient features, resolutions and grant letter