Study into deferred share alternatives to LTIPs

I was very pleased to have been asked by The Purposeful Company to undertake a comprehensive review of the state of the market in relation to deferred share alternatives to LTIPs, following the Investment Association’s Executive Remuneration Working Group report in 2016.

You may have seen the report referenced in the FT. We have produced two documents:

·         A summary of the key findings and recommendations

·         A full report containing further analysis and data to support the findings and conclusions, including the full survey results which we are making available to all market participants.

The study seeks to establish whether there is greater demand for simplified alternatives to LTIPs than we have seen in practice and, if so, what the barriers are to wider adoption.

We sought to be as open source as possible during the study in order to benefit the market as a whole and were impressed with the high level of interest from key stakeholders including listed companies, asset owners, asset managers, proxy advisers and remuneration consultants. A range of market participants helped facilitate the study. Overall, we engaged with over 100 organisations, and greatly appreciate their contribution.

A key take-away is the widespread support amongst investors and companies for significantly greater adoption of deferred share models than we see in the market today. There is also a willingness on all sides to move the debate and practice forward. We are encouraged that The Investment Association has indicated its desire to work with stakeholders on the changes required.