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Companies Need to Up Their Pay Practice Game

Companies Need to Up Their Pay Practice Game

Many companies follow best practices for motivating CEOs and other senior executives, but most don’t.

Larger private companies, along with private equity- and venture capital-owned companies, as well as employee-owned companies, are likely to follow best practices, but others are lagging behind. Our survey found that 40 percent of companies do not have formal long-term incentive plans, and among those that do, a mere 23.5 percent use performance-based vesting rather than time-based vesting.

This is not consistent with public company practices.

Not surprisingly, our survey found that larger companies by revenue behave more like public companies (see chart). Eighty-five percent of companies with revenues from $250 million to $499.9 million led the pack, followed by 80 percent for $1 billion companies and 62 percent for those between $500 million and $999.9 million.

In terms of ownership, 80 percent of employee-owned companies reported formal annual incentive plans, followed by PE-owned (73 percent) and VC-owned (63 percent) companies. Other types of ownership, such as sole proprietorships, partnerships and family businesses are far behind the top three.

For more information please visit www.ChiefExecutive.net/compreport