Executive Compensation Plans

• Category: Corporations - Public - Incentive Compensation Plans
• State: Multi-State
• Control #: US-CC-20-234
• Format: Word; Rich Text

Description Executive Plan

20-234 20-234 . . . Senior Executive Management Incentive Plan which is similar to corporation's existing annual bonus program except for changes necessary to cause incentive compensation to qualify as performance-based compensation under Section 162(m) of Internal Revenue Code. Under Plan, (a) key executives who have potential to influence significantly and positively the performance of corporation are selected by Committee, (b) participants are assigned to an incentive category based on organizational level and potential impact on corporation results, (c) participant categories define level of incentive opportunity, stated as a percentage (up to maximum of 200%) of base salary, that will be available to participant (Incentive Percentage), and (d) Committee uses measures of corporation performance to determine performance goal target levels. Performance measures include one or more of following: (i) return to stockholders, (ii) cash flow, (iii) return on equity, (iv) corporation created income, (v) sales growth, (vi) earnings and earnings growth, (vii) return on assets, (viii) stock price, (ix) earnings per share, (x) market share, (xi) customer satisfaction, and (xii) safety and/or environmental performance. Selected performance measures are weighted by Committee each year to reflect their relative importance to corporation in that Plan Year. A portion of each participant's award, as determined by Committee, is paid in form of restricted stock. Participants can elect additional optional deferrals so that they may receive up to 100% of their award as restricted stock. Any award paid as restricted stock is enhanced with a 25% premium; i.e., for every $100 deferred, participant will receive $125 in restricted stock

Management incentive with withholding is a compensation structure that provides an extra incentive for top executives or managers within an organization to perform exceptionally well. This arrangement is commonly used to align executives' interests with those of the company's shareholders and to enhance long-term company performance. It involves withholding a portion of the managers' compensation until certain predetermined performance targets or milestones are achieved. One type of management incentive with withholding is the Restricted Stock Unit (RSU) plan. Under this arrangement, executives receive a grant of company stock, typically subject to a vesting period. During the vesting period, a portion of the shares granted to the executive are withheld and held by the company in a restricted account. The executive only receives these shares if they meet specific performance goals or stay with the company for a certain period. This ensures that executives have a vested interest in the company's success and encourages long-term commitment. Another type of management incentive with withholding is the Performance-Based Cash Bonus plan. With this plan, executives are entitled to receive a bonus tied directly to achieving predetermined performance targets. A portion of this cash bonus may be withheld until the goals are met, motivating executives to go above and beyond to meet or exceed their objectives. This not only rewards exceptional performance but also encourages managers to focus on long-term value creation instead of short-term gains. Deferred compensation plans can also be considered as management incentive with withholding. These plans allow executives to defer a portion of their regular compensation, such as salary, bonuses, or stock options, to a later date. The deferred amount is withheld by the company and invested on behalf of the executive. This arrangement provides an additional incentive for managers to remain with the company, as they are entitled to receive the deferred amount at a future specified date, often linked to retirement or a predetermined number of years of service. In conclusion, management incentives with withholding are effective tools to incentivize top executives to achieve specific predetermined goals aligned with the long-term success of the company. RSU plans, Performance-Based Cash Bonus plans, and Deferred Compensation plans are all examples of different types of management incentives with withholding. These arrangements not only help attract and retain talented executives, but also encourage them to focus on actions that benefit the organization as a whole and its shareholders.