April 7, 2016
Stats: Companies Granting Performance Equity v. Options
– Broc Romanek, CompensationStandards.com
This Equilar blog has a bunch of pay-for-performance stats, pulling from this “2015 Equity Trends Report.” Here’s an excerpt:
For example, in a recent study of named executive officers in the Equilar 100, Equilar found at least 70% of the executive pay mix was “at risk” under LTIPs over the last three years, and at a broader level, companies are using more performance-based equity grants in long-term incentive plans. According to Equilar’s 2015 Equity Trends Report, nearly 70% of S&P 1500 companies used performance awards in 2014, up from about 50% in 2010.
A closer look at LTIPs revealed that performance awards (in the form of units, stock, and options) comprised almost 80% of individual incentive plans. Equity awards that vest over time—or time-based awards—made up the remainder, and often receive criticism being referred to as “pay for pulse.” Indeed, the appearance of options in executive pay packages has declined in recent years, included in just 60.7% of S&P 1500 incentive plans, down from 75.2% in 2010.