Sure, every corporate director, internal auditor, and compliance officer wants to tie senior executives’ pay more closely to performance—and requiring executives to hold stakes in their companies through stock ownership rules is one way to achieve that. But new data shows that Corporate America has few standards for what a stock ownership program should look like.
The idea of requiring executives to amass a specified ownership stake is nothing new per se; it gained wide popularity in the early 2000s as a way to align executives’ financial interests with that of shareholders. (Typically, executives must own some multiple of their base salary.) What’s new are requirements that executives must also hold that equity stake in for longer periods, even beyond their actual tenure at the business.
