POSTED FROM THE TOWERS WATSON BLOG

Performance-Based LTI: The Devil in the Details

August 12, 2014

 

Despite the growing popularity of performance share/unit plans, these arrangements have a number of accounting nuances that could present surprises.

Steve Kline, Jim Scannella and Steve Zwicker


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A strong stock market has fueled a very active market for initial public offerings (IPOs) on U.S. stock exchanges over the past 18 months. Much of the general buzz in the market often surrounds high-growth IPOs that are founder- and/or venture capital-sponsored. However, there’s been a significant volume of recent private equity-sponsored IPOs. At these companies, the executive compensation programs — especially the equity and long-term incentive (LTI) plans — often look quite different from...


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After four years of mandatory say on pay, most U.S. companies are achieving consistently strong shareholder support for their executive pay programs. While that may not be surprising following a year in which both the S&P 500 and Russell 3000 logged annual returns over 30%, focusing on market performance as the sole cause of the support short-changes the improved dialogue and engagement among companies and their shareholders since enactment of Dodd-Frank’s say-on-pay mandate.

Robert Newbury and...


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The changing competitive landscape for talent in emerging and mature markets is forcing global companies to be more thoughtful about how they source and pay their executives around the world. In particular, the mix of pay and how long-term incentives are adjusted regionally and/or by country warrants special attention.

James Matthews and David Seitz


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2014 Towers Watson Data Services (TWDS) compensation surveys are being completed and TWDS has announced the dates for its fall series of webcasts for survey participants and companies that may be interested in participating in the future.

David Seitz and Marc McBrearty


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The Public Company Accounting Oversight Board (PCAOB) has finalized changes to its auditing standards that will require auditors to consider the need to review the compensation programs of executive officers to identify and assess the extent to which they create risks that company financials would be misstated.

Steve Seelig and Bill Kalten


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 Institutional Shareholder Services (ISS) just released its annual policy survey to obtain feedback from institutional investors, corporate issuers and others on possible changes to the proxy advisor’s voting policies for 2015.

Brian Myers and Josh Steinfeld


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To understand how top-performing companies address the challenges inherent in designing effective executive compensation programs, Towers Watson recently completed an in-depth study of practices among what we’ve defined as enduring high-performing companies. We wanted to understand if they approach executive compensation differently from other companies.  The short answer is that they do, and in sometimes surprising ways.  

Melissa Costa and Todd Lippincott


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As we noted recently, the Securities and Exchange Commission may propose regulations to guide companies in implementing Dodd-Frank clawback policies sometime this fall. There are a number of unanswered questions companies should consider before they adopt clawbacks to recover incentive compensation paid erroneously following material financial restatements, as Dodd-Frank requires. 

Steve Seelig and Russ Hall


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While companies in Europe, the Middle East and Africa (EMEA) show continuing progress in terms of their governance of executive pay and their efforts to engage with shareholders, it appears from our recent pulse survey that many companies in EMEA still have more work to do in the area of long-term alignment of pay and performance.

Richard Belfield and Alex Little


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Towers Watson
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(617) 638-3700  Visit Towers Watson