Selected motivation plans of public companies

Paweł Kawarski        15 May 2015        Comment (0)

The latest column published by “Parkiet” on 25-26 April 2015 titled “Institutional investors liked motivation plans” contains a few observations on employee-shareholding in Polish public companies. The column discusses “motivation plans”, which are oriented solely towards executives and managers.

The plans may be divided into two groups. The first consisting of plans which main criterion of allocation of shares is the increase of net profit in a given period. Among the companies following this principle are: LPP, Pelion, Radpol, Kredyt Inkaso, BZ WBK

The second-group’s plans make share allocation dependent on the fulfilment of several criteria jointly, they may be: sales, EBITDA, net profit, or share price. The following companies in this group include: Kęty, Wawel, Stomil Sanok, Budimex, Vistula, CD Projekt, and Mercator Medical.

The concept of a company operating a motivation plan is positively received by analysts generally. However, analysts cited in the column prefer the plans of the second group underlining that net profit is strongly susceptible to accounting tricks or one-time events without the management’s efforts, while making share allocation dependent on the fulfilment of several criteria on many levels reflect how a company functions and better influences factors of significance for building the value of shares.

Referring to conclusions of the “2014 Survey” published by EFES, described in the previous blog entry, one might observe that the discussed column explains in a way why we deal in a relatively low level of “democratization” of employee-shareholding in Poland. It is difficult to do otherwise where the motivation plans motivate only managers. However, it is a bit surprising that management positively assesses, as one would assume, the effects of a motivation plan for the company and its shareholders and at the same limiting these effects by excluding employees of lower levels from the plan.

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: