December 18, 2015
LTIP Survey: Balancing Shareholder Returns With Financial Metrics
– Broc Romanek, CompensationStandards.com
As noted in this Meridian Compensation Partners press release:
– Earnings-based measures (e.g. EPS, Operating Income, EBITDA) remain the most prevalent type of metric used in annual incentive plans, with over three-fourths (77%) of companies including at least one earnings-based measure in their annual incentive plan.
– Long-term performance-based vehicles (e.g., performance shares/units) are used at 93% of companies surveyed and continue to comprise more than one-half of the total long-term incentive opportunity granted to the CEO (56%) and the other NEOs (53%).
– TSR is the most common metric used in long-term performance awards (58%) and the prevalence of companies granting TSR remains higher than the overall prevalence of companies using at least one earnings-based metric (e.g., EPS, Operating Income, EBITDA) (48%).
– Majority voting standards for director elections and de-classified board structures continue to be predominant practices, with prevalence of 93% and 82%, respectively.