Case Study 2: Retention Plan Design
Background
CGP was engaged to design a retention plan for key employees. The client intended to close one of its facilities and re-assign many of those employees to a new business unit. The retention plan proposed employee payments based on their importance to the closure and transition.
Analysis
CGP reviewed proxy disclosure for 100 mid-sized TSX companies for LTI grants made explicitly as retention awards, including restricted share units (RSUs). We identified several companies that issued retention awards and collected data on the size, scope and conditions of each grant. CGP compared the client’s plan to the retention grants and RSUs observed in the market, commenting on both the size and timeframe of the grant. We also analyzed the grants from an internal relativity standpoint and made comments about the grant sizes compared to other elements of total direct compensation.
Outcome
CGP provided our opinion that the grants were reasonable from an external competitiveness and internal relativity standpoint. The retention plan was accepted by the client, with first payments being made later that year.