Restricted shares in place of PSUs: simpler, yes, but is anyone really paying less?

The saving was never the point for us. We are a cyclical business and three-year targets were either trivially met or hopeless within six months of being set. Committee time on target setting and adjustments fell by more than half. Executives hold more shares for longer. I count that as the benefit.

My worry is the underpin. Every one of these plans has one, usually worded so loosely that it will never bite. If the committee will not actually withhold vesting in a bad period, it is a salary increase paid in shares.

On underpins, ours has two hard tests: return on capital above the cost of capital on average over the period, and no material regulatory or safety failure. In the first cycle the committee reduced vesting by a quarter under the second test. So they can bite if they are written as tests.

Useful range of views. The 40% example makes my point better than I did: the right discount depends on the vesting history, and too many proposals use 50% because it is the convention. A hard underpin that has actually been applied is rarer than it should be.