How to Think About Performance Measurement in Annual vs Long Term Incentive Plans
Most organizations use some combination of annual and long-term incentives in their executive compensation plans. Andrew McElheran, Partner and Lead Consultant at Meridian, explains the difference between annual and long-term plans. Annual plans are designed to change executive behavior. Performance expectations rely on actionable indicators--executives know what they need to do at work to move toward those goals. Non-financial metrics are usually included in annual performance measurement. Long-term incentive plans rely more heavily on financial performance, increasing alignment between executive performance and shareholder value. For more information and insights into executive compensation programs, visit Meridian Compensation Partners at https://www.meridiancp.com.
