Please read until end.
I did not dissect this game's source code at all but I read somewhere that grand master skill in armor usage halves encumberance of armor.
My subjective formula is if I were to be programmer: 7.5n/(m+1) where "n" is encumberance of armor and "m" is armor user skill.
This calculation assumes that armor user can no matter what never terminate encumberance of worn armor for parabolical reasons. Encumberance is actually multiplied by 7.5 and so is potentially treshold of penalties to counter this. It also doesn't take account for strength attribute. If strength isn't taken account for in calculation then it may simply act as treshold multiplier for penalties to be registered but that's not enough since small difference in encumberance would otherwise apply severe slowness in comparison. Simply if current encumberance level is above current encumberance treshold then penalties are applied. Basically encumberance of player's armor is divided by treshold. That number serves as divider for player's movement speed. Having double more encumberance than player can carry halves player's movement but I wasn't testing that at all. It may actually as well be multiplied by 1.5 and in fact reduce speed by about 66% but it all needs to be checked. You know what I'm talking about.
It makes sense in context. This however creates a huge problem. Simply getting novice level of armor user should already halve massive encumberance multiplier. I cannot really justify this formula so I have to snatch another one:
Creature's size is it's encumberance treshold and it can't be changed. Encumberance level is simply armor's encumberance but it's subtracted by (armor user skill multiplied by (strength attribute divided by 100) and also very likely multiplied by a strict number as well). Final value probably cannot go below 0. After all the code probably only checks for penalties if certain treshold is crossed. The reason it makes sense is because original poster of "about 50% reduction at grand master level" who I don't remember is the only instance of this report and could had simply worn armor which gave a sense of 50% encumberance reduction at grand master level. He didn't state strength of his test subject. Somebody could check that out.