Reading the latest remuneration report and recent granting of...

Reading the latest remuneration report and recent granting of share rights, I see that Genworth’s CEO now holds about 1 million share rights. She will be granted these 1 million in shares, for nil consideration, at the various vesting dates over the next few years, subject to performance conditions being met (around NPAT and shareholder returns).

Her annual salary is about $2.6m including target levels of short and long-term bonuses. I wanted to point out the observation that, not only is she on a great salary, she stands to handsomely benefit from a share price that appreciates over coming years. I would say, to optimise her income over the coming years, noting the performance conditions of the share rights, the best thing would be a steadily increasing share price.

My preference is to invest in companies where management have a decent shareholding, so they have skin in the game. It’s great to see some alignment between shareholder and management interests here!

In an organisation like Genworth, management, through their control over reserve releases and therefore reported NPAT, as well as through their control over capital management (dividends and buybacks), have a little bit more control over the vesting outcomes of their own share rights. I’m not suggesting management think about how a result or decision may impact their own bonus, but just noting the alignment with shareholder interests.