James Okafor· VP, Total Rewards, Halcyon Financial Group
Posted in Executive Compensation ·
A lesson I would rather others did not repeat. Canadian listed mining services company. Two years ago the board made a special grant of C$3m in restricted shares to the chief operating officer, who had an offer from a private equity backed competitor. It sat outside the normal plan and had no performance conditions.
The advisory vote fell from 95% to 67%. The chair spent most of the following year in meetings about it. And the executive left anyway, eighteen months later, with half the award vested.
With hindsight the board was negotiating against a number it never verified. I would be interested in how other committees test a retention risk before they respond to it.
0 reactions · 4 replies · 6 views
Priya RaghunathanGRS, CSI
Head of People Analytics, Calibre Software
Our chair's rule is that the committee will not discuss a counter-offer unless the executive has shown the written offer to the chair in confidence. It has been invoked three times. Once the offer was real and we matched part of it. Twice the conversation went no further.
Nadia HaddadCRP
Director of Rewards, MEA, Qasr Holdings
The private equity comparison is the trap. The headline is a multiple of invested capital on an exit that may never happen, with the executive's own money at risk. We now have our consultants convert any such offer into an expected value on stated assumptions. A package described as worth 20 million usually comes out nearer 4 to 6.
Dana WhitfieldCRP, GRS
Director, Global Compensation, Meridian Health Systems
Priya RaghunathanGRS, CSI
Head of People Analytics, Calibre Software
Agreed on structure, and that is the part I regret most. Time vesting in equal tranches meant half was banked at eighteen months. The written offer rule is going into our committee's terms of reference.
