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Case Studies


Case Studies #01 | Performance Management
Case Studies #02 | Economic Profit Incentives

Case Studies #03
| Share-Based Compensation

Share-Based Compensation for Semiconductor Manufacturing Company

To replace the existing Employee Stock Option Plan (ESOP) with a less dilutive alternative as well as a more cost effective compensation program given that accounting standards now require all companies to expense their ESOP.

To develop and implement long-term performance-based share grant plans.

Carrots Solution
Carrots designed an omnibus framework which provides full flexibility in terms of plan types and plan mixes. By introducing both a Restricted Share Plan (RSP) and a Performance Share Plan (PSP), the company is able to reward employees with fully paid for shares provided pre-established performance conditions are met. The RSP and PSP are share-based awards that seek to give management employees an ownership stake in the long-term growth and success of the Company.

The RSP is awarded to managers and above and is based on operational performance targets. Employees are better motivated through improved pay alignment as their efforts can and will have a direct impact on their performance targets. To enhance retention in the company, employees are also required to fulfill further time-based service requirements after the performance period ends before the shares are delivered to them.

The PSP is an added incentive awarded to top management employees to reward and motivate them for delivering significantly stretched value-based performance and strategic contributions to the overall success of the company.

The RSP and PSP dovetails with the company's strong pay-for-performance compensation philosophy which promotes share ownership through wealth creation plans and retention of good performers. The transition away from ESOP into these share-based awards has helped to maintain the compensation expense charge to the company while reducing dilution to shareholders significantly. The overall enhanced compensation package furthermore has a strong alignment to shareholder value and wealth creation.