Long-term Incentives

The main design aims of OTA's long-term incentives are:

To focus executives on a particular outcome or achievement over the next 36 to 60 months;
To provide participation in organisational overachievement, i.e. a direct link between organisational performance and reward; and
To motivate executives to overachieve in the long term.

Long-term incentives traditionally align participation to a shareholder's rewards. This is achieved through the participant being a recipient of a reward that is linked in some way to the rewards of equity.

Equity long-term incentives can be supported by participant income taxation concessions specifically designed to support the provision of equity participation. Participant income taxation concessions are available for the use of shares, options and limited recourse share investment loans.

OTA designs long-term incentives that link the reward of the participant to the reward of shareholders, but require the executive to fulfil performance hurdles before being entitled to any reward.

OTA performance hurdles generally involve two components: performance criteria and tenure criteria. The performance criteria are designed to suit the organisation and industry, i.e. earnings per share or total shareholder return hurdles. The tenure criteria or vesting period involves the reward, subject to the performance criteria, being progressively transferred in ownership to the executive over the term of the incentive.

OTA long-term incentives usually use one or more of the following structures:

Contact OTA to further discuss how a long-term incentive could assist your organisation.