The Corporate Director Podcast
Inside Today's Boardrooms: Trends in executive compensation
Dec 7, 2023
The podcast discusses trends in executive compensation, including the use of financial and non-financial metrics in short-term and long-term incentive plans, the usage of TSR as a modifier in compensation, and metrics for ESG goals and trends in incentive design.
12:36
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Quick takeaways
- Short-term incentive plans in executive compensation often include non-financial metrics, with a growing emphasis on ESG-related metrics.
- Long-term incentive plans commonly utilize a portfolio approach, combining performance-based and service-based vehicles with relative Total Shareholder Return (TSR) as a prevalent metric in performance awards.
Deep dives
Short-Term Incentive Plans: Trends and Metrics
The podcast discusses the trends and metrics observed in short-term incentive plans in executive compensation. The most prevalent performance metrics for these plans continue to be operating income, revenue, cash flow, and earnings per share (EPS). Although the use of EPS has decreased slightly, about 80% of companies include non-financial metrics in their annual incentive plans, with a growing emphasis on ESG-related metrics. The study also highlights performance and payout curves in bonus plans, with minimal changes in the overall statistics since the previous study in 2018.
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