Should unvested shares count towards an executive shareholding guideline?

The line most companies draw is whether a performance condition is still outstanding. Performance shares do not count, since they may vest at nothing. Shares that are subject only to continued service or a holding period, such as deferred bonus shares, count on a net-of-tax basis, typically at around half their face value.

For a new joiner the better lever is the mechanism for getting there. We require 25% of net annual bonus to be invested in shares until the guideline is met. Our CFO reached 100% of salary in just over three years without any change to the counting rules.

Thank you. We will keep performance shares out, add deferred shares on a net basis, and propose the bonus investment requirement to the supervisory board. The CFO was content once he saw the projection.