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Executive Long-Term Incentive Plans: Pay for Performance Trends

Featuring commentary from

Since the advent of Say on Pay in 2011, the concept of “pay for performance” has been a foremost trend in executive compensation, both in principle and practice. Executive Long-Term Incentive Plans: Pay for Performance Trends, featuring independent commentary from E*TRADE Financial Corporate Services, Inc., examines performance metrics and performance periods for long-term incentives of CEOs, CFOs and other NEOs at S&P 500 companies over the last five years. The report also took a deeper dive into the most recently disclosed long-term incentives for CEOs in the S&P 100 looking at performance metrics, performance metric weightings, performance ranges as a percentage of target performance and payout ranges as a percentage of target payout.

Report Cost:

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Key Findings:

  • About 57% of S&P 500 companies utilized relative total shareholder return (TSR) in their long-term incentive plan in fiscal 2015, up approximately 17 percentage points since 2011

  • S&P 500 long-term incentives were most commonly measured over a three-year performance period, with nearly eight in 10 companies utilizing this measurement timeframe

  • In the S&P 100, threshold performance levels for CEO long-term incentives were most often set between 91% and 99% of target performance, while maximum performance was most commonly between 101% and 110% of target

  • Threshold payout of S&P 100 CEO long-term incentives was most commonly 50% of target payout, while maximum payout was most frequently 200% of target