Recently, Financial Times published an article titled “Share price windfall reignites debate over executive pay.” Reigniting a fire that has not died down for decades seems a bit much, but let’s talk about it. The article focuses on how quantitative easing has increased share prices for companies in the UK. One argument is that this...
It’s an age-old negotiation. Pay me more and I will perform. Perform better and I will pay you. So, what comes first, the payment or the performance? Hay Group’s Annual CEO Compensation Survey was released last week. The results show the highest weighting ever (31%) for long-term performance plans. Was this a result of executive...
In the past several months, Switzerland has made some interesting compensation headlines. Swiss voters recently passed a referendum on executive compensation that is more far-reaching and restrictive than anything we currently have in the U.S. This new set of rules was supported by a convincing 68% of voters. At nearly the same time, a UBS...
All too often the myriad types of truly performance-based equity get muddled together into a stew. Like other great equity compensation ingredients (RSS, RSU, ISO, NQSO) each type of performance equity should first be tried as an independent ingredient before being thrown into your LTI pot and hoping for the best. Performance Earned Units (PEUs)...
Dan Walter, Performensation Most of the problems with executive compensation tend to originate within a few categories. I have attempted to summarize these and look forward to the compensation community adding their take on this topic. Look at your past mistakes and issues. Did they start with one of these seven categorical errors? Assumption: Assuming...
Dan Walter, Performensation Restricted Stock Shares (RSS), often called Restricted Stock Awards (RSA) or even more simply Restricted Stock, have been used longer than any other equity compensation instrument. Companies have used variations of restricted stock for almost as long as stock has existed. While ISOs and NQSOs are “appreciation only” awards, RSSs are Full...
Dan Walter, Performensation In recent presentations I have heard several compensation professionals from the UK refer to their “Shareholder Spring” of 2012. The reference is to the raising of voices from shareholders. While we all love a little hyperbole, I believe that their Shareholder Spring was barely a fling. The UK’s Shareholder Spring led to a...
Incentive Stock Options are a great place to start talking about equity compensation. ISOs are “appreciation-only” vehicles, meaning they have direct value to employees only if the stock price appreciates above the initial grant price. Other common appreciation-only instruments include NQSOs and SARs (to be covered in future posts). If you understand ISOs, you can...
Executive Pay that Works for Shareholders and Companies Like Milli Vanilli in 1990, Total Shareholder Return (TSR) is currently all the rage in executive compensation plans. And, like Milli Vanilli, as entertaining as TSR is to some, it may prove to be a less than stellar performer for most. Of course, unlike the disgraced pop-stars,...
“Danny, if I have to tell you one more time to stop jumping on the bed, you are going to get it!” The warning is not enough and Danny jumps on the bed again. “Danny, next time you jump on the bed I’m taking away your allowance.” Shareholders have become much like lenient, but frustrated...
