The Advisors' Blog

According to this NASPP blog – and the 2024 Equity Incentives Design Survey that NASPP cosponsored with Deloitte Tax – over 90% of public companies now offer performance-based equity awards.

That state isn’t shocking, but NASPP and Deloitte have been doing this survey a long time – and the trend line for these types of awards is striking. 25 years ago – before “say on pay” had entered our lives – only 29% of public companies used performance equity. Crazy! Today, the prevalence does vary by industry, with tech and life sciences lagging.

The blog looks at 6 trends in these types of awards. Here’s an excerpt:

Trend #5: Vesting is typically conditioned on two or more metrics
A full 76% of companies use two or more metrics to measure performance. Most (41%) use two metrics, while 26% use three and 10% use four or more.

Across all industries, TSR is the most popular metric, and EPS is the third most popular. For tech and life sciences companies, revenue ranks second, but it drops to fourth among other sectors, where ROIC/RONA take the second spot.

Trend #6: Three years is the standard performance period
An overwhelming majority—83%—of companies use a three-year performance period for their awards. We see little variation across industries, though the few companies that use a different period are more likely to be in the tech and life sciences sectors.

About half of companies that measure performance over less than three years impose additional service conditions (i.e., a “service tail”) that extend beyond the performance period, typically by two years or less. Only 13% of companies with a three-year performance period impose a service tail.

At our upcoming “Proxy Disclosure & 22nd Annual Executive Compensation Conferences,” we’ll be discussing key issues in structure & disclosure for short-term and long-term incentives. The Conferences are happening in Las Vegas on October 21st & 22nd – right before the big NASPP Conference in the same location – and it’s not too late to register! You can do that by signing up online or by reaching out to our team at info@ccrcorp.com or 1.800.737.1271. Here’s the full agenda – full of practical insights to help you as you head into year-end and the 2026 proxy season.

– Liz Dunshee