According to Chief Executive’s CEO compensation report, 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 for pay, but others are lagging behind.
Our survey found that 40% of companies do not have formal long-term incentive plans, and among those that do, a mere 23.5% 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 above). Eighty-five percent of companies with revenues from $250 million to $499.9 million led the pack, followed by 80% for $1 billion companies and 625 for those between $500 million and $999.9 million.
Public company best practices can and should be applied to private companies, starting with:
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