Tag Archives: LTI

Considering Performance Stock Options

The rise in both the prevalence and prominence of long-term performance plans has been one of the most significant trends in executive compensation over the past 15 years. At the time of the dot-com market collapse (March 2000 to October 2002) and the demise of several prominent U.S. companies (e.g., the Enron scandal revealed in October 2001), long-term performance plans were only used by a relatively small portion of large U.S. public companies. Continue reading

Alternatives to Quantitative Metrics in Performance Share Plans: Use of Strategic Objectives

Companies have migrated a significant portion of equity compensation to performance-based long-term incentive (LTI) awards—typically performance shares or stock units (PSUs)—from stock options. Over 80% of companies in the S&P 500 now have such plans; these also now comprise the majority weighting among LTI vehicles. This trend has been driven in, large part, by the desire of Compensation Committees to place at least one-half equity compensation in the form of “performance-based” pay as defined by the proxy advisory firms. Continue reading

S&P 500 CEO Compensation Increase Trends

CEO pay continues to be a widely debated topic in the media, within the government, and in the boardroom among investors and proxy advisors. As the U.S. was in the heart of the financial crisis in 2008 – 2009, CEO total direct compensation (TDC = base salary + actual bonus paid + value of long-term incentives) dropped for two consecutive years. As the U.S. stock market sharply rebounded and the economy started to slowly grow again, CEO pay also rebounded. Large pay increases occurred in 2010, primarily in the form of larger long-term incentive (LTI) grants. Since then, year-over-year increases have been fairly moderate – in the 2% to 6% range for the period 2011-2015. Continue reading

Download a free copy of our new eBook!
Simply provide your e-mail address and a link will automatically be sent to you.
Request a paperback version of the book. Input your address in the message field.