This new Willis Towers Watson report provides current S&P 100 benchmarking data on executive stock ownership guideline practices and retention policies, as well as trend data since 2015.
Key takeaways for 2021 include:
- The vast majority (90%) of companies base their stock ownership requirements on a multiple of base salary. The balance use an absolute dollar value, fixed number of shares, lesser of salary multiple or fixed share amount, or lesser of a dollar value or fixed share amount.
- Of the companies that express CEO guidelines as a multiple of salary, 48% use 6x salary and 42% use greater than 6x salary. For non-CEOs, 3x salary is the most common (47%), followed by 4x salary (29%).
- The most common timeframe to achieve compliance with the stock ownership guidelines is five years (75%); 20% merely require retention until the guideline requirements are met (i.e., no deadline).
- More than 70% of companies have retention requirements in conjunction with their stock ownership guidelines. Of those, most (70%) disallow executives from selling their shares until they are compliant with the stock ownership guidelines. The balance consist of either a “stand-alone” policy (separate from the stock ownership guidelines) that restricts sales of shares from LTI awards for a certain period of time post-vesting regardless of the stock ownership guidelines, or a combination of both compliance with the stock ownership guidelines and a stand-alone policy.
Access additional resources on our Employee Compensation page.
This post first appeared in the weekly Society Alert!