Incentive programs

1
Incentive programs

• Tim Carty,
• Partner

2
Purposes

• Attract
• Motivate
• Retain

3
Incentive programs types

• STIP
• LTIP

• Corporate performance
• Cash
• Corporate value
• Equity
• Cash

4
Short term incentive plan (STIP) is based on

• Individual performance
• Business unit performance
• Overall corporate performance

5
Long term incentive plan (LTIP) is based on

• Value
• Given Variable
• All variable

6
Long term incentive plan (LTIP)

• Equity
• Or
• Cash?

7
Measures

• Straight-line
• Threshold
• Min Target Max
• Stretch or Budget?

8
Incentive plan failures

• Dot.com crush
• Handcuff boyar
• Labor law
• Corporate tax deductions

9
Questions

• www.ey.com/cis