Objectives

• To align participants compensation with the risk / reward experienced by shareholders.

• To motivate participants to act in the best interests of the organization over the long term.

• To award participants with Tax-Deferred Capital Accumulation through certain types of  Long-Term incentive vehicles

Characteristics of a well-designed Long-Term Incentive Plan:

Trends in Long-Term Incentive Plan Design

• They encourage teamwork and cooperation among participants.

• Awards are based on specific and measurable achievements.

• Award payments are not guaranteed.

• Group efforts and achievements are recognized.

• The award criteria are simple and easily understood.

• Awards are sufficient to make the effort worthwhile.

• Performance targets are realistic and attainable.

• Plans are performance-driven and funded through incremental earnings.
• Plans that relate executive’s reward to actual company performance as opposed to stock price movements.
• Plans that directly integrate executive incentives with the company’s long-term strategic objectives.