Resource Library Performance Stock Options

The evidence to date does not suggest a significant shift to performance-contingent stock options, despite the pressure for companies to enhance the appearance of having "performance-based" pay. Yet there are circumstances where this vehicle may make good sense, and in this article we outline the benefits and risks of performance options, and when they might be considered as part of an overall pay strategy.

Many executive compensation observers have suggested that performance options — standard stock options with one or more additional performance conditions — will become a more significant and prevalent long-term incentive vehicle over the next several years. This viewpoint is driven by the perspective espoused by proxy advisors (e.g., ISS and Glass Lewis) and some shareholders […]