Executive Incentive Programs

Keeping your executive and management appropriately incentivised remains a key part of business strategy driving success, profitability and sustainability. Incentive schemes have gone through many changes and exotic structures the years, primarily to take advantage of tax loopholes but also to keep pace with global best practice.

We can loosely categorise these incentive schemes into two types - STIP's and LTIP's:

An STIP (short term incentive plans) is a formal scheme that details the conditions, amounts, and schedule in which the executives receive a bonus based on their performance over a period of one year or less. The main benefit of the short-term incentive plan is to align the executives' goals with the company's short-term strategy and to reward them for achieving specific financial or operational targets. The bonus amount is usually calculated as a percentage of the base salary and may vary depending on the level of performance achieved.