June 21, 2012 Executive Compensation Executive & Director Pay Design Articles

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Executive & Director Pay Design

The Benefits of Holding Requirements for Equity Incentive Plans Advancing the Dialogue

Ownership guidelines have become the standard approach for public companies to demonstrate a commitment to executive ownership.

Executives get paid a lot of money to make tough strategic decisions and manage the businesses they run on behalf of shareholders, and a very significant part of that compensation is in the form of company equity. Critics contend that it is often too easy for executives to “cash out” before a crisis occurs, and governance advocates have been calling for more stringent requirements for executives to hold more stock. Stock ownership is also seen as a key component to mitigating excessive risk-taking and to aligning executive pay with long-term performance.

In this article we explore the benefits of an alternative approach” holding requirements for vested shares” which can be a more meaningful and practical approach to encourage and demonstrate ownership.

View the full article as it was originally published.

John Borneman

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