The Council of Institutional Investors on Sept. 17 overhauled its policy on executive compensation, urging public companies to dial back the complexity of their plans and set longer periods for measuring performance for incentive pay.
The update suggests firms explore adopting simpler plans comprised of salary and restricted shares that vest over five years or more. “For some companies, emphasis on restricted stock with extended, time-based vesting requirements—for example, those that might begin to vest after five years and fully vest over 10 (including beyond employment termination)—may provide an appropriate balance of risk and reward, while providing particularly strong alignment between shareholders and executives,” the CII’s policy states.
