Resource Library Articles

The pressure is on to abandon once-popular equity vehicles, particularly stock options, which have taken the heat as a prime instigator of executive pay excess. The right LTI design for a given company should be based on a careful consideration of the needs and characteristics of the company, its shareholders and its employees.

Establishing principles to address specific pay program amounts and components will help the Board to ensure that decisions regarding director pay are made thoughtfully, holistically, and accurately.

Many companies are now adopting or considering long-term incentive plans where value realized by participants is contingent on achievement of specific performance goals, which are often not based on stock-price. While these types of plans provide opportunities to focus management on results that will drive shareholder value, they don't come without significant risk of unintended consequences.