Dana Whitfield· Director, Global Compensation, Meridian Health Systems
Asked in Executive Compensation ·
Fourth-generation family-owned engineering group based in Austria, around 6,000 employees and EUR 1.4bn revenue. The family will not issue equity to non-family managers. We have for the first time a chief executive from outside the family, and the three-year cash bonus she inherited is based on a single profit figure.
She has asked for something closer to what she had at her previous listed employer. The family is open to a phantom share plan but worried about valuing the business every year and about a large cash payout in a bad liquidity year.
How have others in family or foundation-owned companies handled valuation and payout?
0 reactions · 2 replies · 7 views
Priya RaghunathanGRS, CSI
Head of People Analytics, Calibre Software
We use a fixed formula in place of a valuation: a multiple of average EBITDA over three years less net debt, with the multiple set at grant and not revisited. Nobody argues about it, and it costs nothing to run. Payout is capped at three times the grant value, and the plan allows up to half to be deferred for a year if a liquidity test is not met.
Nadia HaddadCRP
Director of Rewards, MEA, Qasr Holdings
A formula is fine until an acquisition or a large capital programme distorts it. We have an external valuation every second year and roll forward with the formula in between. It costs about EUR 40,000 a time and the family prefers a number produced by someone independent. Do ask whether she wants phantom shares or simply wants the upside, as a value-creation bonus with a cap might do the job.
