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Twelve Ways To Strengthen Your Incentive Plan

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  • David Glassman

Abstract

This paper argues that most incentive compensation plans are ineffective for a variety of reasons, including: too many performance measures and too much complexity; ▪ arbitrary targets that are subject to intense lobbying by executives; ▪ caps and floors that narrow the payout range and stifle incentives; ▪ performance measured at a level too high to be meaningful for most managers, or too low to encourage teamwork; and ▪ a failure to integrate the incentive plan into the overall compensation philosophy. ▪ After examining these problems, the author offers 12 suggestions for implementing plans that support management's aspirations to create value for shareholders.

Suggested Citation

  • David Glassman, 1999. "Twelve Ways To Strengthen Your Incentive Plan," Journal of Applied Corporate Finance, Morgan Stanley, vol. 12(2), pages 107-117, June.
    • Handle: RePEc:bla:jacrfn:v:12:y:1999:i:2:p:107-117
    DOI: 10.1111/j.1745-6622.1999.tb00012.x
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