The Advisors' Blog

– Ed Hauder, Exequity

Recently, I blogged about a new survey we were conducting regarding long-term incentive practices. We have collected responses and posted this summary of the responses.

In a nutshell, it looks like 2009 LTI grant values will decline in total by more than 10%. Of those companies changing their values, the median decrease (at the time of the survey) was 20%, but a number of companies have not yet gotten Compensation Committee/Board approval, and those companies are contemplating cuts of 30% at median.

It will be interesting to see how companies respond if the 2009 LTI grant data shows such decreases. If they stick to trying to deliver a market competitive value, one would expect that 2010 LTI grant values would erode further. However, if companies respond to all of this by rejecting a value-based approach to LTI grants (which many companies appear to be doing in 2009), then they would be likely to stick with a set number of shares for their grants, and the value would change then only as a result of stock price movement.