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Executive Long-Term Incentive Plans

Featuring commentary from

Executive Long-Term Incentive Plans, an Equilar publication, analyzes pay for performance metrics and periods over the last five years for long-term incentive awards granted to CEOs, CFOs and other NEOs at Equilar 500 companies. Equilar also conducted a more in-depth analysis into the most recently disclosed long-term incentives granted to CEOs at companies in the Equilar 100. E*TRADE Financial Corporate Services, Inc. provided independent commentary detailing how companies structure incentives to meet certain pay for performance goals.

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Key Findings:

  • Relative total shareholder return (TSR) was the most common performance metric in CEO incentive awards from 2012 to 2016. Over that time period, the percentage of companies utilizing this metric increased from 43.4% to 52.0%.
  • The prevalence of return on capital (ROC) in incentive awards for Equilar 500 CEOs rose by 6.1 percentage points from 2012 to 2016, while earnings per share (EPS) hovered around 28% usage throughout the study.
  • Relative TSR was most often used in conjunction with another metric, as evidenced by two-thirds of companies pairing it with another metric.
  • None of the five most common metrics—TSR, revenue, ROC, EPS and operating income—were weighted at 100% a majority of the time.