Essay Database

Performance shares: This is a modification to the stock options. At the core this strategy deals with rewarding stock options and cash to its executives. A typical example of how it works: A CEO receives a contingent grant of up to 5,000 performance shares at the beginning of the year. The total shareholder return relative to an industry peer group dictates how many shares the executive actually gets. If the shareholder return value relative to the …

…the method of tying bonus to the return of investment is going to gain support. Since the market became more volatile, pay experts have said stock grants may be used more widely and could supplant options. More and more institutional investors are becoming critical of stock grants, as they are an outright gift of shares to the executives. To summarize I think that the bonus and performance shares are a good alternative for executive compensation.