In recent years, Meridian has seen a trend toward more and more performance-based equity in executive compensation programs. This trend is largely driven by expectations among advisory and investment firms. They believe performance metrics should be tied to as many pieces of executive compensation as possible to ensure alignment with shareholders.
In this video, David Bixby, Lead Consultant at Meridian, explains why investors can be skeptical of the growing use of restricted stock. Is it simply a “pay-for-pulse” program, where executives are rewarded just for sticking around?
David suggests that a robust internal culture of high performance is critical to ameliorating some of the risks of “pay-for-pulse” compensation programs. Yet, he concedes that moving to the use of more restricted stock is still a hard sell and companies should prepare for further adjustments to overall programs to grow investor confidence.
For more information and insights into executive compensation programs, visit Meridian Compensation Partners at https://meridiancp.com.