Executive Long-Term Incentive Plans

Executive Long-Term Incentive Plans, an Equilar publication, examines the performance metrics and periods associated with long-term incentive awards granted to CEOs, CFOs and other NEOs at companies in the Equilar 500. The report delves into the trends revolving around the design and specific awards in incentive compensation for c-suite executives. E*TRADE Financial Corporate Services, Inc. added independent color and commentary to provide more detail into the structure of incentives and awards associated with performance.

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Key Findings:

• Relative TSR continues to be the most prominent long-term incentive plan (LTIP) performance metric among all executive officers. In 2017, 54.7% of companies utilized it in their equity grants to CEOs, and a total of 54 individual equity awards to Equilar 100 CEOs included relative TSR as a metric.
• Return on capital and earnings per share (EPS) were the second- and third-most common LTIP performance metrics, respectively. A total of 37.1% of companies used return on capital in LTIP awards granted to CEOs, while 29.7% used EPS in their 2017 equity grants.
• EPS was the most common, standalone performance metric with 31% of usage weighted at 100%, while revenue was most likely to be used in conjunction with other metrics.
• By far, the most prevalent performance thresholds for LTIP awards granted to CEOs were between 90% to 100% of the total award, while the most common maximums for those same awards fell between 100% and 110% of the target.
• Approximately 87% of performance awards granted to named executive officers in 2017 had three-year performance periods.