Equilar, the market leader in executive compensation data and research published an analysis of Executive Ownership Guidelines at Fortune 250 companies. The Equilar 2009 Executive Stock Ownership Guidelines Report covered 240 filing companies and found that 196 companies disclosed ownership policies.
The vast majority (83.5%) of executive ownership guidelines use a multiple of base salary as a requirement. These ownership guidelines typically require the executives to accumulate shares with a multiple value of their base salary. CEOs were required to have the highest multiple on average at 5x while the VP level on average was required to hold 1.5x.
Key findings of the report included:
Ownership Policy Prevalence: The prevalence of Fortune 250 companies with publicly disclosed executive stock ownership policies remained consistent at 81.2 percent in 2008, compared to 82.6 percent in 2007. The number of companies using both ownership guidelines and holding requirements grew steadily, with slightly more growth from 2006 to 2007.
Ownership Guideline Design: Executive stock ownership guidelines defining ownership targets as a multiple of base salary are still the most commonly used design model by far, making up 81.9 percent of all ownership guidelines. The general guideline design break-down remains mostly similar to that of 2007.
Definition of Stock: Stock options are less likely to be included in counting stock ownership for executive ownership guidelines. Among companies with ownership guidelines, 12.2 percent allow options to be applied toward ownership targets, compared with 33.5 percent that explicitly exclude stock options from ownership levels. Share equivalents and plan shares, on the other hand, are both counted by over 35 percent of companies disclosing a definition of stock.
CEO Target Ownership Levels: At Fortune 250 companies, the median value of target stock ownership levels for CEOs was approximately $6.1 million in 2008, a decrease of 3.2 percent from 2007.
Other Practices: In 2008, more Fortune 250 companies began to disclose information regarding guideline compliance, hardship provisions, anti-hedging policies, and retirement clauses in their executive stock ownership policies.
The complete 35-plus page report is provided to all Equilar customer subscribers through Equilar's Knowledge Center. Non-subscribers can request a copy of the report by visiting http://www.equilar.com/
