One-off share awards for CEO at IPO ­– Willis Towers Watson

A third of companies listing on the UK main stock market in the last two years made a one-off share award to the CEO, according to research from Willis Towers Watson. The potential to make a one-off award in these circumstances increased if the CEO concerned had a relatively low shareholding before the initial public offering (IPO) and was not a founder owner.

• Where made, the median value of these one-off awards varied significantly around a median of 315% of base salary.
• Restricted stock was the most common vehicle for delivering one-off awards (used in 56% of cases), followed by performance shares (22% of cases).
• Three-quarters of awards were time-based and/or conditional on admission.
• The payment of one-off awards at IPO was not universally criticised by investors – only one company doing so received a vote ‘against’ recommendation from the Institutional Shareholder Services.

Jessica Norton, a director in executive compensation at the consultant, said:

‘Whilst one-off awards generally provoke a negative reaction from institutional investors and proxy advisers, these findings suggest that one-off awards made in connection with an IPO are generally accepted, providing the structure and conditions attached to the award are deemed appropriate.’