As we enter into the traditional plan design season for long-term incentives, does the prospect of a market correction or recession weigh on your mind?
The goal of any executive compensation program is to align pay with performance. Management and Boards strive to achieve that alignment through careful plan design, selecting equity vehicles and performance measures that are most appropriate for their company and their industry.
However, certain vehicles such as stock options are less than ideal when facing this uncertainty, and long-term financial-based performance goals could become obsolete in the first year (think Performance Stock Units granted in 2007.)
Market uncertainty can greatly impact these types of awards, and companies that fail to account for market uncertainty may find themselves facing a failure of alignment between their stock’s performance and the long-term incentive awards ultimately earned.
Fortunately, there are best practices in plan design that companies can incorporate when faced with market uncertainty. Join us as we discuss these practices, and how they can make your plan design robust in the face of turbulent stock markets.