RE: In line trading20 Feb 2023 11:26
EasiWynns - In pretty much all listed companies staff at a variety of levels are incentivised via the more 'vanilla' bonus route and then, at the more senior levels (i.e. VP, Snr VP, Director, Executive Board etc.) by LTIP's (Long Term Incentive Plans). LTIP's are a critical part of the remuneration package and can be vested after a period of time (usually 3 to 5 years). In addition, within the Private Equity space, there is something called "Carry", which effectively can also pay out hundreds of thousands of pounds (and more) should a Fund/Co-invest perform at or above promised returns. So, yes how a share performs makes a massive difference to how much an individual might take home over, let's say, a four year period. There is just one fly in the ointment however! At CEO level it 'can' encourage a CEO and his/her Executive Board to be 'biased' to building the share price - and not the business! It happens quite a bit and I personally know a CEO very well, who has almost developed a 'reputation' (in the negative sense) to growing the share price, enjoying the LTIP's that result and then moving on to a new listed CEO role (and yes, you can grow a share without actually growing the company!). I should also point out, that Executives can and do move on, if they think that their LTIP's are quite simply not going to materialise (i.e a consistently poorly performing share). SO, the ideal scenario is a nice steadily growing company; with a nice steadily growing share price. That way everyone internally (and externally) is a winner - and the company also gets to retain its top talent; which is a lot harder than it sounds to achieve! ATB