My client ("the Bank") would like to implement a long term incentive plan in order to remunerate and retain certain executive managers as well as directors (Board & levels -1, -2, -3). The aim is to link their remuneration to the Bank’s performance, other than through typical bonus mechanisms.
The Bank would need advice, outlining rationale and key considerations for implementing an innovative long term equity and benefits plan.
Specifically, the analysis on key considerations to be taken into account should include rationale for putting in place a such a plan, with regards to:
- the human capital perspective: motivation, retention and incentivizing local staff to work for better operations and profits of the Bank on a long term perspective, on top of existing key indicators. We need to bring arguments on what a local equity plan would add to existing remuneration program.
- the regulatory perspective: a preliminary view of EBA remuneration guidelines
- the market trends: benchmarking with other banks of similar size (medium, according to EBA classification) and also examples from other industries
- the tax benefits: exemption on certain segments of the plan, deferral, higher net income for the employees as compared to regular bonuses.