Pay and Performance: The Compensation Blog: A New Generation of Performance Plans?

Over the past few years we have seen performance share units and other varieties of performance-based awards grow in prevalence in response to a series of corporate governance concerns. What concerns? Stock options, time-vested awards, executive ownership levels, and most importantly the link between pay and performance.

In this first round of say-on-pay in the US this spring, we saw these issues raised as key points in investors’ and proxy advisers’ voting policies and actions. The new say-on-pay environment has turned the dialogue on these plans from anecdotal comments to a chorus of complaints about the manner in which these plans have been designed and operated over the past few years and the resulting impact on corporate governance.

While performance plans have been adopted to resolve some governance issues, they are creating new governance challenges which are not always apparent or easy to identify and measure. We have identified TWENTY unique governance issues specific to performance plans and how companies can address these issues before next year’s say on pay votes. Resolving these issues will result in the next generation of performance plans.

Equity compensation, long one of the list of items considered by investors, has become a central corporate governance issue and equity compensation professionals need to understand and be able to respond.

Here are some resources for learning more about this issue:

Performance Problems? Addressing Emerging Issues with Performance Plans