2 . HAVING ‘ SKIN IN THE GAME ’
“ In the medium to long term as the economy rebounds and performance starts to turn , remuneration committees will have an increasingly tough balancing act of rewarding true out-performance vs market correlated performance .” businesschief . eu
2 . HAVING ‘ SKIN IN THE GAME ’
Next up in the report Deloitte reflects on the concept of top executives having ‘ skin in the game ’ to “ demonstrate their alignment with shareholders with share ownership .” Whilst this concept is subject to interpretation depending on multiple variables , Deloitte comments that “ whatever the rationale for ‘ skin in the game ’ is , if the measure of ‘ skin the game ’ is the value of shares that are held , whether unencumbered or restricted , COVID-19 will likely have diminished their value .”
As a result , should COVID-19 have a long term effect on the price of shares it is likely to challenge the standard policies when it comes to the relationship between share value targets / requirements and guaranteed pay . Deloitte expects that as a result of this challenge “ the hold that restricted share ownership has on executives will diminish , and the alignment that unencumbered share ownership offers will reduce . Companies may be tempted to offer more shares due to their decreased value in relation to pay . Policies will likely vary depending on the circumstances and the nature of the executive role in the post COVID- 19 situation .”
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— Tyrone Jansen , Associate Director , Human Capital , Deloitte Consulting Africa
NEXT STEPS
“ In the medium to long term as the economy rebounds and performance starts to turn , remuneration committees will have an increasingly tough balancing act of rewarding true out-performance vs market correlated performance .” businesschief . eu