More Companies Turning to Performance-Based Shares - Compliance Week
More Companies Turning to Performance-Based Shares - Compliance Week (subscription)
The use of performance-based equity in a CEO compensation packages has
gained popularity over the last five years, as shareholders are
increasingly demanding that companies provide compensation that attempts
to link pay and performance, says Equilar,
an executive compensation data firm. A study of S&P 1500 companies
by Equilar revealed that shareholders no longer feel time-based
restricted stock, including stock options, are sufficient to tie pay to
performance.
“An executive must be able to execute against specific metrics and
goals and successfully implement corporate strategies in order to
receive a predetermined level of stock,” said the report.
2010 Proxies
showed that 49 percent of S&P 1500 companies gave CEOs
performance-based equity grants, up from 43 percent in 2006. Over 60
percent of chief executives received shares with performance
periods that spanned multiple years. Total equity granted to CEOs and
other named executives also increased from 2006 to 2010. Equilar found
the number of stock options assigned to CEOs increased from 6.2 percent
(2006) to 7.4 percent (2010). Restricted shares grant to CEOs, as a
percentage of total restricted shares granted, increased from 1.2
percent in 2006 to 3.4 percent in 2010.
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For those of you in the ECE that may not know me other than through these postings....
I am a true believer in effective performance equity programs. My firm, Performensation, helps companies with all aspects of these plans from initial strategy and design, through communication and best practices (and everything in between.)
If your company has, or is planning to have, performance units, performance shares or anything similar, please reach out so we can chat.
Thanks
Dan
415-625-3406
dwalter@performensation.com