Global Survey Suggests Long Term Incentives Equal Corporate Success

Have you read the recently published Global Equity Insights 2016 report? Overall conclusions within the comprehensive 33 page report are consistent with previous year’s findings that long term incentive plans are being offered by more companies and across a greater portion of the workforce than ever before – and that is translating into success.

The survey was sponsored by 10 companies from various industries including Fidelity, the Global Equity Organization, hkp/// group, SAP, Siemens, and more.  The survey sample includes participation from 148 large global companies from 21 different countries. 91% of those companies have a market capitalization above USD 1 billion, and 60% of the companies reported revenues of more than USD 5 billion in 2014.

Survey participants confirmed the notion that attracting and retaining top talent are two of the most critical objectives of a long term incentive plan (LTIP). Employee retention grabbed the top spot with 45% of participants indicating this as very high in a ranking of plan objectives.

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The report also indicates that “on average, the companies surveyed have utilized LTIP for 16 years.”1 Over the course of this time, it is apparent that companies have continued to review and improve their LTIP strategies, and one of the ways we have seen change is in the level of staff that companies deem eligible. This is especially true in North America where the survey found that more than 80% of companies offer LTIP to middle management.

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Interestingly enough, even though plans are becoming more and more broad based, the survey also found that 81% of participants indicated that their number one criteria for determining eligibility is career level.

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Another interesting finding from the objectives and eligibility section of the report is the correlation between eligibility and company success.  The report indicates that “employees of high performing companies are more often eligible for LTIP than employees of low performing companies,”1 leading to the assumption that companies with broader based equity plans see a return on that investment in the form of greater corporate performance.

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You can find more details and download your copy of the report here.

1 http://www.equity-insights.org/reports/Global_Equity_Insights_2016.pdf