Five Questions Directors Should Ask About Restricted Stock

mark-emanuel

The landscape for long-term incentive plan design has radically changed, as companies have largely replaced stock options with restricted stock as the main component of long-term incentives granted to executives. Research firm Equilar has found the percentage of S&P 1500 businesses granting options decreased from 79% in 2007 to 75% in 2012, while companies issuing restricted stock jumped from 80% to 92% in the same period.

The shift toward restricted stock started roughly a decade ago, when the Financial Accounting Standards Board required all companies to begin expensing the value of stock options, which were the most popular choice for long-term incentive plans up to that point.

To help directors better assess the best ways to use restricted stock, Agenda asked compensation consultant Mark Emanuel to provide perspective. Emanuel is a senior consultant at the executive compensation consulting firm Semler Brossy. He identifies five questions comp committee members should ask when reviewing how restricted stock should be used in compensation plans.

Read the full article, “Five Questions Directors Should Ask About Restricted Stock” by Mark Emanuel (subscription required).