General Discussion - CM8, page-107

Although this was answered, in that there is no set share price to be met, or at least not one that is disclosed, I will explain further how this works in practice, in case it is of interest to others.

In general, a business will have a 3-5 year growth plan and will set itself some short-term goals and targets to achieve in the next 12 months.

These targets can be revenue, profit, or anything that leads towards meeting the longer term goals for the business. These 3 or 4 big targets are to be achieved by the actions and direction of the CEO or MD.

In turn the CEO, splits the big targets into Dept. based targets. So for example the Head of Finance, Head of Sales, Head of Marketing will take or create goals for the staff in their Dept and have overall accountabiity to achieve those targets.

The individual workers in each Dept. will have their set of goals to achieve, such that the collective efforts of the whole company is working towards the same objective.

As part of their employment contract, each employee will sign off on their own set of deliverables, they will know exactly what they have to achieve and by when and they will also know that some part of their remuneration depends upon meeting these targets.

Periodically during the year, there will be a Manager/employee discussion to verify if all is on track and to adjust resources if needed, to ensure every deliverable remains on track.

At the end of the year, the employee will need to demonstrate that all objectives have been met before before being granted their incentive bonus.

Bonuses can be cash or shares or a mix and the proportions determined by the grade level of the employee.

From the most recent presentation slide deck, the goals are clearly laid out and you can be confident that each employee in the business will have been tasked with some activity to ensure achievement.



Now, the goals shown above are not the exact wording given to employees, as some of these goals can only be achieved as a cross-functional team and also they may be given tighter timeframes than those laid out here to ensure there is enough room for project slippage.

It is also likely that they are given more objectives than disclosed here, that can be used to surpise to the upside or replace one of the stated objectives due to some factor out of the Company control occurring.

In addition to the above plan, there are the normal "business as usual" activities, such as budgetting and forecasting etc that the teams have to keep in control as well.

This overview of a Performance Management process is general and well accepted in Companies that want to adopt the concept of High Performing Teams and hopefully provides some insight to those unfamiliar with the process.

When I see a plan like this spelled out by Management, then it makes it so much easier for me as an investor, as I know exactly the minimum that will happen and in what timeframe.