Target

The expected level of performance that satisfies company budgets and achieves 100% of the target incentive opportunity.

The “at-risk” compensation is usually paid in equity (like performance rights or options), for performance measured over a period greater than one year (typically over 3 to 4 years) designed to align executive wealth with long-term shareholder value.

The IFRS and US GAAP accounting standards include the probability of meeting vesting conditions for valuing grants subject to a market measure (i.e. derived from share price, using a Monte Carlo method), but do not apply a probability assessment for grant subject to a non-market performance measure. So, apples are not apples if comparing grant fair values across companies using accounting fair values. These anomalies can be easily addressed for like-for-like comparisons given the right technical skills.