Sweet dreams, page-6

I agree with the potential problems of of LTI’s . That’s why if they are used they need to be designed as well as possible. To be pragmatic, once founding shareholders move on they can be a good way to help new managers afford to get some real skin in the game.

Just two years ago TGA LTI was far better then what is being proposed this time round. Required performance hurdle was 20% ROCE (return on equity plus debt) with a performance period of 5 Years.

It was dumbed down last year to 18.5% ROE and this year they are proposing 16% ROE.

In respect to quality of the LTI Remuneration this company is going backwards quickly. Are they also forewarning that profitability is continuing to slide?

The change from ROCE to ROE means they can achieve the hurdle by taking on more debt which they are certainly doing and still the target is being dropped. Plus they have shortened the performance period to 3 years to boot which only discourages long term thinking.

IN TGA’s case the ROE measure is only a gateway hurdle before vesting is determined by reference to TSR ranking group, which according to the notice can be found on their web page, except I can’t find it anywhere and so far they haven’t respond to investor query . Hmmm...