Executive Equity Replicator Plan

An Executive Equity Replicator Plan (Replicator Plan) long-term incentive involves using a structure created around a contractual relationship between the executive and the organisation. The contractual relationship provides the executive with a notional share of the organisation's value as calculated through a pre-determined formula.

Other names for replicator plans are shadow plans and phantom plans. Basically, they provide a bonus retention plan that rewards at an approximation to the internal rate of return of the company.

There is no restriction on the performance hurdles that can be applied to the Replicator Plan.

This design is particularly suited to organisations that are not listed, or do not have a ready market for their shares, and to divisions or subsidiaries of organisations where a more focused incentive is required.

The Replicator Plan is generally a cash-settled plan with no specific taxation benefits.

If designed correctly, Replicator Plans should not be subject to any equity-related Corporations Law or Australian Stock Exchange Listing Rules.

All expenses involved in the design and establishment of the Replicator Plan are tax deductible to the organisation. All payments to executives from the Replicator Plan will be deductible to the organisation in the financial year of payment.

Should you require any assistance with, or wish to discuss the application of a Replicator Plan, please contact OTA.