Publish Date

Sep 23, 2021

Preparing for an IPO

A&M Tax Advisor Update

An IPO represents an inflection point for senior management, who may realise material gains on any pre-IPO equity and may see significant changes to their roles. This makes it especially important to consider executive remuneration at the time of the IPO.

We have recently published a guide to planning remuneration changes at IPO. This looks at the key remuneration issues companies face at IPO and how companies that have recently listed on the main market of the London Stock Exchange have addressed these.

Specifically, our report looks at:

•    levels of remuneration for Executive Directors and Non-Executive Directors;
•    how pay has been structured, including what types of long-term incentive have been introduced;
•    which best practice features apply and how these have been adopted;
•    what equity interests management have before and at the point of IPO; and,
•    what equity incentive arrangements have been put in place for employees more generally.

Most companies adopt relatively market standard arrangements. In particular, the overwhelming majority of companies replace their pre-IPO incentive arrangements with a conventional performance share plan and will seek to align with best practice by introducing bonus deferral, aligning pensions with the workforce and introducing share ownership requirements. However, whilst many of these elements will be non-negotiable for the company’s new owners it is also critical that they are designed so as to be well-aligned with the organisation’s strategy and future culture. It is also important to ensure that the cascade of these arrangements to other parts of the organisation or to future hires is carefully thought through to avoid issues shortly down the road.

How can A&M’s Executive Compensation Services team help?

The Executive Compensation Services at A&M has collectively helped over 40 companies of all sizes in preparing for an IPO and is well positioned to assist companies and their Remuneration Committees to develop remuneration philosophies and policies that take into account the key policy considerations.
All engagements are led by a senior member of A&M’s Executive Compensation Services practice who attends all meetings and is actively involved in all deliverables. This ensures you always have access to the right level of advice, particularly when making critical decisions under time pressure. Our team has a combined 150-plus years of experience in advising on executive remuneration matters.
Please contact us if you would like to discuss any of the issues considered in this report.
To see more insights from the Executive Compensation team click here.