Remuneration & Compensation Case Study

Annual Bonus Plan, Retail Fund Management

Brief

Following internal discussions on the introduction of a new incentive remuneration policy for their retail fund managers, advise the Board on the structure of and the key performance indicators for a new annual bonus plan including stock/fund deferral/stock option element.

Solution

• using existing market knowledge, provide advice on the design features of the annual bonus plan for star and other fund managers, focusing on the key performance indicators
• using market based data, provide advice on quantum of bonus payable, as a percentage of salary for each grade, at different levels of performance
• advise on concept and tax implications of deferral, including a mechanism enabling managers to choose the amount of the deferral element and the deferral vehicle e.g. parent company stock or stock options, own fund or basket of funds, or cash
• prepare financial models to determine aggregate quantum of payout under the plan under various “what if” scenarios
• prepare detailed plan specification, including details on treatment of leavers and joiners
• oversee implementation.

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