Making Long-Term Incentives “Sticky” in Volatile Markets

Challenge: A multinational company in the industrial sector faced the challenge of creating a sustainable long-term incentive (LTI) plan in a rapidly evolving, cross-border regulatory environment with changing shareholder views.

Approach: Our GECN Europe team worked closely with the remuneration committee of the board of directors and senior management to tailor an LTI solution that considered both the company’s business strategy and long-term talent needs to ensure its sustainability. The team evaluated goals and performance metrics and also took into account European Union and national regulations, as well as international pay practices and trends.

Results: The company successfully implemented the LTI program which included a grant of performance shares, the vesting of which was subject to time-based conditions as well as to a calibrated mix of external and internal targets and KPIs. The Board of Directors as well as shareholders recognized an improved alignment of pay and performance together with increased robustness of the compensation framework to the evolving regulatory environment.

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