Philosophy
Our philosophy on executive compensation is that it should be performance-based and actively governed by a fully-informed board.
- The Board and Compensation Committee should be fully empowered with competitive information and analysis, a detailed compensation philosophy, and a range of alternate compensation solutions.
- Pay should be linked to performance through a combination of business performance measures.
- Rewarding stock performance is important. However, its importance should be balanced relative to other performance measures over which management has more direct control.
- Incentives should be weighted to reward performance in the key value drivers that directly affect stock price.
- Targets should be set at highly challenging but achievable levels that require “stretch” performance.
- The goal-setting process should be based on consistent standards for levels and ranges of performance.
- Long-term incentives should reward long-term, sustained performance.
- Equity-based compensation should provide opportunities to build an incentive portfolio that grows in value as the company’s value increases over 5 to 10 years.
- Options should typically be granted in combination with other long-term incentive vehicles (such as performance-vesting restricted stock.)
- A significant portion of long-term incentive awards should be tied to long-term financial goals.
- Stock ownership by management and directors is important. There is an ideal level of ownership and an approximate mix of purchased, earned, granted, and upside-only (options) equity interests.
- Benefits and perquisites are an extension of pay and should be aligned to a Company’s overall reward philosophy.
