Designing Management Incentive Plans: How-To Series for the HR Professional
From bankruptcy filings to government loans, from restructurings and downsizings to major financial restraints on spending, U.S. businesses have seen many significant challenges in the past two decades. Companies that accepted loans through the Troubled Asset Relief Program have faced caps on executive pay; the U.S. Securities and Exchange Commission has continued its efforts to add more performance-related data to proxy statements; media attention to compensation has increased and the effectiveness of performance-driven pay programs is constantly evaluated and debated.
While these factors clearly affect executive pay, they also have exerted pressure on middle-level compensation programs — those positions just below top-level executives. For all these reasons, compensation professionals will continue to be required to change or add incentive compensation programs.
In this update, authors Bruce Overton and Mary Steele bring these present-day issues to the fore and provide a framework for the audit or initial design of managerial incentive compensation plans. They discuss the selection of various plan types within an established total compensation strategy, along with alternative solutions to issues related to the design of incentive compensation plans.
While these factors clearly affect executive pay, they also have exerted pressure on middle-level compensation programs — those positions just below top-level executives. For all these reasons, compensation professionals will continue to be required to change or add incentive compensation programs.
In this update, authors Bruce Overton and Mary Steele bring these present-day issues to the fore and provide a framework for the audit or initial design of managerial incentive compensation plans. They discuss the selection of various plan types within an established total compensation strategy, along with alternative solutions to issues related to the design of incentive compensation plans.
