Thinking | 31 August 2020

AGM season and executive equity arrangements

These are seven key questions our Corporate and Tax groups suggest listed companies should be considering right now:

1. Are any of your existing employee incentive schemes due for renewal for placement capacity (LR 7.2) purposes?

2. Have there been any changes to the terms of existing employee incentives schemes (or grants under such schemes) that may require going to shareholders for refreshed approval this year?

3. If seeking approvals at this year's Annual General Meeting (AGM), do you know who can vote to approve the plans? Have all mandatory voting exclusions been taken into account?

4. If considering the issue of performance shares, have you considered ASX's Guidance Note 19 and the shareholder approval consequences?

5. Have you checked that the conditions for tax deferral or exemption are still being met?

6. Are your plans structured tax effectively for the company so that it is getting a tax deduction for the costs of providing equity?

7. More generally, have you considered if your plans are still meeting their goals to incentivising your key people? For example, if you have issued options that are 'under water', do you stay the course or look at restructuring the plan?

With planning underway for many listed company AGMs at present, it’s important that executive equity arrangements are not overlooked. Don’t hesitate to get in touch with us to run through these key questions, rather than wait another 12 months for the next AGM!

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