March 2017

74 APAC / March 2017 , 1701AP39 Up For the Challenge Egan Associates has gained a reputation for being the go-to company to answer complex pay challenges that few other advisory firms have the experience, skills or ability to approach with confidence. Founder John Egan has spent decades in pay consulting, including leading the ANZ division of an international consulting group and serving as the national president of the Institute of Management Consultants. He has also contributed to talent development in the industry via engagement with the Business School at the University of Sydney. His long-standing experience and network has contributed to Egan Associates’ success, as has the strength of his remuneration database and experienced team. When asked what a pay consultant does, many companies might think of salary comparisons, market benchmarks and pay rises. For some, annual bonus and equity plan design will also come to mind. Yet while conducting executive remuneration reviews and assisting with the design of incentive plans is a core part of Egan Associates’ business, there are many other areas where the boutique consultant assists clients. The variety of work undertaken throughout the course of a year is broad and the complexity of the issues eye- popping. “Clients are generally surprised at the breadth of projects in which we’ve been involved when they raise a matter of concern. Often they discover we’ve addressed similar challenges in a number of settings. They find this incredibly valuable,” John Egan said. A major part of the business is undertaking reviews of Non-Executive Directors’ remuneration. This is not a simple matter of comparing retainer fees between organisations. It also involves consideration of the increased workload devolved to Board Committees, the restructuring of Board Committees and the variable workloads across Committees. Advice might also examine whether differential rewards are appropriate for Directors that live outside the host exchange country and whether payments in such a situation are made in a common or multiple currencies. Egan Associates must also consider whether Directors are involved in equity- based programs, either as a replacement for or in addition to their Board fees. Following increased transparency requirements and the introduction of a shareholder vote on whether executive remuneration is reasonable, clients often engage Egan Associates to assist in describing and defending remuneration structures. “Even if an award makes perfect sense given the company’s situation, if shareholders don’t understand the Board’s reasoning behind the award, they will vote against it,” Egan said. Egan Associates has helped companies to explain the reasoning behind termination benefits, sign-on arrangements as well as the level and structure of both annual and long term incentives where organisations had experienced significant growth or a decline in their market value and earnings. When engaging new talent particularly in the C-suite, companies call upon Egan Associates to work with executive search companies in structuring reward which would be attractive to the necessary talent yet also be acceptable and easily understood in disclosures to the ASX or NZX. “In certain industries where the talent market is global, arriving at the right offer to the ideal executive can be pivotal to the hire,” Egan said. In working across organisational reward issues in the APAC region, the team is called upon to consider local terms and conditions and differential taxing arrangements to arrive at equitable outcomes for staff working in different countries. This involves considering the necessary level of alignment with the parent organisation’s pay structure and position classifications. It also involves advising companies on how to adjust global short or long term incentive plans to account for regional challenges including taxation, or account for a lack of participation among regional executives. When companies are preparing for listing, primarily on the ASX or NZX markets, Egan Associates works with the company’s legal advisers, tax advisers and current owners (such as private equity, a family, an investment bank or fund) to guide the organisation in the adoption of market acceptable reward structures that will often differ from those in place while the company was privately held. Egan Associates also assists with disclosure requirements. “Companies can be overwhelmed by the scrutiny on remuneration when they list. It’s important to hit the market with the right settings,” Egan said. When executives or shareholders are engaged in court disputes, Egan Associates has acted as an expert witness – for example where a group of shareholders dispute executive remuneration that has had a negative impact on their dividends or where there has been a marital breakup and the valuation of assets will significantly impact on outcomes. Government entities call on Egan Associates for advice on the levels of remuneration for Principal Office Holders and Statutory appointees within the policy and administrative arms of government. Government Boards or government-owned corporate entities also seek Egan Associates’ advice when the necessity of attracting and retaining top talent override the principles applied within the administrative and policy arms of government. This has often involved developing submissions for review by government and/or Ministers. Each of these engagements is different, requiring a broad range of specialist knowledge. Egan Associates has developed an extensive library of information to enable its clients to be at the forefront of remuneration thinking.