A survey released by
Company (NYSE:XRX), found a significant increase across the globe in the use of cash-based long-term incentives (LTI) as part of employee compensation programs.
For example, since 2012 cash LTI awards increased from nine percent to 18 percent in Canada, six percent to 18 percent in the UK, seven percent to 18 percent in France, and 10 percent to 14 percent in the U.S.
Buck Consultants’ annual
Global Long-Term Incentive Practices Survey
confirmed that companies are substituting cash LTI for equity-based awards where it is appropriate. Additionally, the use of cash LTI awards increased in the U.S. at all employee levels (except CEO) and more than doubled over the past two years for vice presidents (VP), directors, and managers.
“Companies are taking a hard look at the use of equity-based incentives and determining that, in some cases, cash may be the more effective motivator,” said Sandra Sussman, a director in Buck Consultants’ compensation practice.
Results indicate full-value awards remain the most prevalent vehicle, with the most value being delivered in the form of time-based restricted stock/units.
Buck’s survey examined the global long-term incentive compensation practices of more than 130 participating companies in 40 countries. Multinational companies considering the use of equity-based LTI on a global basis must consider, among other things, the culture, local market conditions, regulatory challenges and tax implications of each country where employees are located. The GLTI Survey is a resource that provides guidance to compensation professionals about whether and where to grant equity-based awards.
Other key survey findings include:
- Stock options continued to decline in use.
- Retention is now the most often cited reason for making off-cycle grants, increasing from 77 percent in 2012 to 97 percent in 2013.
- Overall median value of equity delivered to U.S. employees continues to be significantly higher than that to employees in other countries and has remained stable over the years.
Participation in LTI plans continued to decline for lower-level employees across the globe, except in Europe and Canada, which saw a rebound.