Tag Archives: Payouts

Lower Performance for Target Pay? How Companies Address Pay-for-Performance Alignment in Times of Declining Performance

Ensuring alignment between pay and performance is challenging enough when a business is performing well. But what about during times of an industry or economic downturn, waning company performance, a shift in strategic business focus, or a period of investment when performance expectations are not as high as in recent years? Today, institutional investors and proxy advisors are hyper-focused on pay-for-performance alignment and, by extension, the rigor of performance goals. Any indication of declining incentive goals year-over-year can bring heightened scrutiny, negative commentary, and can increase the likelihood of an “against” Say-on-Pay (SOP) vote recommendation from proxy advisors. What alternatives exist for a company facing the prospect of performance expected to be lower than the prior year? What should be considered in setting incentive plan goals and what can be expected from shareholder watchdogs who closely examine performance goals and alignment with shareholders? Continue reading

Strengthening Executive Pay and Performance Alignment by Using a 162(m) “Umbrella” Plan Design for Performance Shares

Performance-based long-term incentive (LTI) awards—typically performance shares or stock units (PSUs)—are a large component of annual LTI awards for executives at most companies . Compensation committees continue to wrestle with the various design considerations associated with PSUs. Continue reading

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