There’s more to long-term incentives than stock options

More companies moving towards diverse plans in executive compensation
By Larry Moate and Michael Ng
|Canadian HR Reporter|Last Updated: 07/31/2007

The design of executive compensation programs provides both challenges and opportunities for any company that embarks upon such an exercise. A properly designed program maximizes the potential for wealth creation for both shareholders and executives, and effectively aligns the interests of both.

Analysis of 2005 compensation data reported in 2006 proxies for companies listed on the S&P/TSX composite index indicates that almost 50 per cent of the compensation value for CEOs is derived from long-term incentives.

In the S&P/TSX 60, the elite corporate index in Canada, the emphasis on long-term incentives is even more pronounced. About 60 per cent of the overall compensation value for CEOs is provided by long-term incentives.