Events & Programmes

Long Term Incentives for CHROs and Compensation Professionals

2-day workshop

Goal: To equip CHROs and compensation professionals with a comprehensive understanding of long-term incentives, enabling them to effectively spearhead their organisation’s overall executive compensation philosophy

Duration: 16 hours spread over 2 days

Programme Overview:

Programme Overview: The implementation of long-term incentive programmes, especially share-based incentive programmes, in an organisation requires the involvement of a cross-functional team (CFT) comprising individuals from business, human resources, finance, legal, secretarial, and more. However, the primarily responsibility for design and project management generally lies with the CHROs and compensation management team. They are entrusted with the task of designing plans that align with the organisation’s business and HR objectives. Therefore, it is crucial for them to have a firm grasp of the “art of the possible” in addition to a deep understanding of long-term incentive plans and trends. This is essential for effectively collaborating with the CFT.

This comprehensive programme on long-term incentives goes beyond the fundamentals; it explores plan objectives, design elements, financial implications, shareholder implications, proxy advisor implications, and much more, by combining theoretical and technical knowledge with real-life case studies.

Topics Covered:

  • Defining Plan Objectives
  • Role of Long-term Incentives
  • Deep Dive into Share-based and Cash-based Instruments
    • Stock Options
    • Restricted Stock Units
    • Performance Shares
    • Stock Settled Stock Appreciation Rights
    • Cash Settled Stock Appreciation Rights
    • Phantom Stock
    • Cash LTIPs
  • Factors Influencing Selection of Instrument(s)
  • Approaches for Determining Grant Size
  • Plan Periods (Vesting, Exercise, etc.)
  • Performance Linkages / Metrics
  • Considerations for Good and Bad Leavers
  • Dilution vs. Secondary Market Purchase
  • Tax Implications for Employees
  • LTI Valuation Basics
  • Financial Implications (Share-based Compensation Expense, Cash-flow Impact, etc.)
  • LTI Design Case Study and Exercises
  • Key Regulatory Aspects (Companies Act, SEBI, RBI, IRDAI, etc.)
  • Special Cases (e.g., Plan Design Modifications, Underwater Options, M&A, Spin-offs, etc.)
  • Perspectives of Shareholder Advisory Bodies
  • Approval Process and Documentation
  • Preparing for NRC / Board Meetings
  • Special Event Case Study and Exercises
  • Key Market Trends

Long Term Incentives for Boards, Nomination & Remuneration Committees (NRC), and Directors

2-hour session

Goal: To help directors understand the principles, nuances, governance considerations, and potential pitfalls associated with long-term share-based incentive programmes 2 hours

Duration: 12 hours

Programme Overview:

As share-based or cash-based Long Term Incentive (LTI) programmes become increasingly prevalent in Indian organisations, it is imperative that directors, particularly independent directors, understand the nuances of such plans. LTI programmes aim to balance multiple objectives for various stakeholders, including executives, employees, and shareholders. Thus, directors must have a comprehensive understanding of the principles underlying LTI proposals and the nuances related to their impact on both the executives involved and the company’s financials. Directors also need to be aware of how proxy advisors and institutional shareholder advisory bodies respond to share-based plans.

According to an analysis conducted by a prominent proxy advisory firm in India, 70% of ESOP resolutions in 2022 received more than 20% institutional dissent. Considering that these are special resolutions that require the support of 75% of the valid votes cast in order to pass, Nomination & Remuneration Committees (NRCs) need to exercise extreme caution.

Topics Covered:

  • Role of Long Term Incentives
  • Deep Dive into Share-based and Cash-based Instruments
    • Stock Options
    • Restricted Stock Units
    • Performance Shares
    • Stock Settled Stock Appreciation Rights
    • Cash Settled Stock Appreciation Rights
    • Phantom Stock
    • Cash LTIPs
  • Factors Influencing and Principles For:
    • Selection of Instrument(s)
    • Eligibility
    • Grant Frequency
    • Plan Periods (Vesting, Exercise, Etc.)
  • Considerations for Good and Bad Leavers
  • Approaches for Determining Grant Size
  • Dilution Vs. Secondary Market Purchase
  • Financial Implications (Share-based Compensation Expense, Cash-flow Impact, etc.)
  • Key Regulatory Aspects (Companies Act, SEBI, RBI, IRDAI, etc.)
  • Special Cases (e.g., Plan Design Modifications, Underwater Options, M&A, Spin-offs, etc.)
  • Perspectives of Shareholder Advisory Bodies
  • Approval Process
  • Key Market Trends in LTI Programmes