The mental strength of elderly nuns, congestion hot spots on the London Underground and the odds of instant physical attraction were just three of the more unlikely topics to find their way into discussions at this year’s Equiniti Employee Services Forum.
The keynote speaker, academic mathematician and broadcaster Hannah Fry, introduced much of this leftfield thinking, yet her contribution was complementary to over-arching themes such as building stories out of data, managing change in uncertain times and keeping one step ahead of technology and best practice to meet the needs of the end user.
“We've always been a provider of technology and a provider of services, but we see the future of Equiniti being governed by what we do for our end users and how we invest to create those experiences,” said Chief Executive Guy Wakeley in an opening session with Ian Cox, Managing Director and Head of Share Plan Services.
Guy pointed to key achievements in the past year such as a focus on product development in the US, EQ Boardroom growth in the UK and new centres in Milwaukee, Bengaluru and Krakow, while Ian updated the room on developments in employee services such as the new executive and discretionary module of the share plans portal and Power BI reporting.
Equiniti’s ongoing evolution into a data and technology business has moved it into interesting spaces. Indeed, Hannah began her talk by exploring the parallel fields of the tangible world and mathematics – and how the data expertise developed by Equiniti can provide a bridge.
It’s a baby boy – again!
Her examples were eye-catching. She used data to demonstrate how a surge in male births at the end of major wars is linked to a tiny statistical chance that a woman is more likely to give birth to a boy earlier in her cycle. “What is happening here is that, at the end of a war, everyone gets together again and is very happy to see each other, and women become pregnant slightly earlier and so there are more male babies born.” It’s an interesting perspective on the longstanding belief that the spike is simply nature’s way of restocking the supply of males.
On a more sombre note, Hannah then looked at the geographical pattern of murders committed by serial killer Harold Shipman. But it wasn’t sensationalism – she showed how lessons from these patterns helped inspire a data-driven solution to tackle malaria through linking areas of stagnant water to potential outbreaks.
“Once you have these metrics, once you have a representation of your world within the mathematical universe, that’s the point at which you can ask much more interesting ‘what if’ type questions,” she said.
Sharon Storey, Head of Executive Reward & External Reporting at Equiniti client M&S, agreed. “It’s about turning data into stories. We've always been good at using data for our customers but we’ve never been that great at capturing data for our colleagues, to predict trends, to see what’s making them tick and why certain things might happen. But now we’re building that context so that, for instance, we can see when people are voting with their feet and going into the Sharesave scheme or not going into it. That insight is invaluable.”
Eyebrows will be raised
Another big theme of the day was managing change in times of uncertainty. Bill Cohen, a Senior Partner in Deloitte’s Global Reward Group UK, began the morning session on corporate governance by saying: “When I started in this field, there was hardly any governance for remuneration, and there wasn’t really any meaningful disclosure and, actually, you didn’t get paid very much.” How times have changed.
Together with Anna Watch from BT, Nicholas Stretch from Ashurst and Adam Rose from Boudicca, this session explored the following key remuneration trends:
- Reduced pensions for new hires
- Broader range of annual bonus pay-outs
- Early disclosure of pay ratios
- Adoption of new Code features such as post-employment shareholdings
- Limited examples of alternative incentive structures
The panel also debated key areas of dissent in the FTSE 350 such as recruitment packages, salary increases, over-boarding, LTIP and stretch of targets.
“We’re not predicting any material movement on salaries,” said Bill. “Some of the companies who have been the most parsimonious and/or responsible over the last five years have realised that they’ve got a bit left behind by the market. But in the current climate, any more than 2% raises eyebrows and anything more than 5% raises serious questions.”
In terms of balancing the interests of the board, shareholders and advisers, Anna likened the current work of remuneration committees to “dancing on a pinhead”.
Another plenary session explored the big topic of Long Term Incentive (LTI) Policy and Practice Below Board Level, featuring David Ellis of Ernst & Young (EY), Robert Head of Neo Reward, Lina Brown of Equiniti and Cara Hegarty of Linklaters.
David revealed the following key themes to emerge from recent EY research:
- Alignment of interest between the executive cadre is becoming a thing of the past
- Emerging and high-performing talent is now a bigger focus
- The global role is only a partial reality
- Eligibility is not a function of scale or business complexity
- LTI cost is not a driver of LTI practice
- Communications sophistication is progressing, but at a snail’s pace
- Market data is deemed unreliable
- All-employee equity remains important
- LTI needs to catch up with new methods of agile working
The themes kicked off a lively trail of panel discussions and audience polls. “The big trend I’m seeing is a lessening of the focus on retention,” said Cara. “I have quite a few clients in the tech space and what they’re saying to me is that they don’t really care if their employees leave. They’re happy for them to leave and go and work for competitors and learn new skills and then hopefully return back to them. They’re seeing their workforce as far more fluid – people cycle out, people cycle back in. And that doesn't really fit with how we think about LTI plans so I wouldn't be surprised if we see much shorter qualification and vesting periods.”
The Forum programme also included sessions on Boards and Stakeholder Engagement, UK and International Sharesave, Employment Benefit Trusts, Executive Remuneration (Compliance in Practice), Global Governance and Corporate Transactions, and culminated in a Question Time session. Chaired by Jennifer Rudman of Equiniti, the panel facing the questions comprised Andrew Patterson from Clifford Chance, John Franklin from Aon, Paul Ellerman from Herbert Smith Freehills and Daniel Hepburn from PwC – and the discussion was dominated by the political landscape, particularly Brexit and the possible implications of a Labour Government (such as proposals to broaden the vote on executive pay to employers and consumers, and forcing companies to transfer 10% of their shares to an employee ownership fund).
The panel reflected that we are living in interesting times that require a willingness to adapt combined with a steely resolve and an ability to balance competing needs. Consequently – a positive corporate culture is essential.
“I think that when it comes to a company’s culture, actions and words have to go hand in hand”, said John. “A share plan can certainly help foster a good culture. But what it can’t do is compensate for a bad one. So companies need to be very clear about what their cultural messages are. Then they can look at how they use their share plans to support that culture.”
Challenging times but the stunning venue for the event, the Da Vere Latimer Estate, helpfully provided subtle hints that things have been worse. Phil Ainsley, Equiniti’s Director, Products & Markets in Employee Services, first established the Employee Services Forum 16 years ago and, in his welcome speech, he revealed that the Latimer Estate was once a holding prison camp for German U-boat crews and Luftwaffe pilots. The Brexit debate might be a difficult one, but Europe has been in tougher places.
- Further detailed reports from the Employee Services Forum will follow – including Corporate Governance, Boards and Stakeholder Engagement, Executive Remuneration, LTI Policy and the Analytics of Reward.