Short-Term and Long-Term Incentive Plan Design

Incentive compensation typically represents a significant part of an executive compensation package. Getting the design of such plans right is critical, to ensure they effectively drive desired performance and results.

Further, because executive compensation packages can feature multiple incentive plans, including annual, mid-term and long-term incentives, careful consideration of the measures used in these plans is essential to these plans work in a harmonized manner.

Stock options continue to be the most prevalent type of long-term incentive plan, but many organizations have introduced other equity or cash-based mid- or long-term incentive plans that create a more diverse array of performance measures and that balance executive focus and rewards on both near-term and longer-term organizational performance.

McDowall Associates takes a holistic and rigorous approach to the design of executive incentive plans that considers not only the design features, metrics, and competitive positioning of each individual plan, but also how these plans work in concert. Such attention to detail is essential for creating sound plan designs that optimize links between pay and performance while effectively mitigating enterprise risk.

To find out more about how McDowall Associates can help you with your Executive Compensation needs, please contact us.