Addison Comline assisting entrepreneurs with Slicing Pie

Following on from our recent “Preparing your business for sale” webinar, we bring you the next webinar in our series. We look at practical steps that entrepreneurs can take to improve the value of their business. This includes 20 mechanisms to improve your business’ valuation and some tips and key insights gained from working in M&A. 

A company repurchasing its own shares

Understanding and applying the objectives for well designed incentives are critical in the design, development and implementation of such structures.

Interview on CNBC

Why are companies cancelling their share based payment structures? Our recent interview on CNBC business related to share-incentive structures. The combination of poor equity performance, cancelled dividends and lacklustre economic growth has proven a lethal concoction to these schemes – many are permanently impaired and will have to reviewed and at the very least reset. 

Share-based payments issues at listed companies

The current economic shut-down coupled with dramatic falls in the prices of listed equities means that executive long-term compensation plans are under-water. Given the extended time frame of poor corporate performance and resultant pressure on share prices, many of these share-based payment plans are unlikely to materialise. These share-based payments make up a significant proportion of executives’ total pay packets. And hence, we can expect more attention by market participants.

Share-based payment structures

Many executives have taken basic pay-cuts (approx. 10% of total package) Likely that their share-based payments will not materialise – which is significant But boards also make allowances for these circumstances – which activist are starting to take exception to. What is the result of the current situation? As a result of these ‘poor’ returns

An introduction to incentives and remuneration

Remuneration structures and policy today is largely a commoditized ‘cookie cutter’ approach where the same structures are used across industries and businesses with little thought given to the specific circumstances facing the organisation and its people. Company’ boards are going to have to return to the drawing board for some deep thinking (and action) on their current executive remuneration policy and implementation plans.

Tax changes affecting share incentive structures

The South African tax legislation related to share incentives has changed dramatically in recent years. Essentially, all of the gains accruing to employees from “restricted” equity instruments are now subject to income tax.

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