Remunerating Key Managers – What Structures Are Available?

One of the most important decisions for private company owners relates to how best reward its key managers. Many owners find it challenging to retain key staff and are often considering how best to develop an incentive plan to assist in incentivising selected key employees to grow the value of the business and achieve an exit. It is common across many of the private businesses for the top performing managers to request “equity” in the business as a form of incentive when commencing employment. Whilst this can be achieved in a tax effective manner for the manager, not all owners are prepared to give away equity in their business. Often owners face uncertainty around how much is appropriate to “give away”; how to separately reward employees in different states/countries; and, getting around the psychological concerns associated with diluting their own shareholdings.