On this latest episode, Jared Berman, Partner at Meridian Compensation Partners, LLC, unpacks the fundamentals of annual incentive design.
He explains what qualifies as an annual incentive plan, how organizations can align incentives with shareholder value and the balance between financial and non-financial measures. Jared also breaks down payout structures, the role of individual performance and common pitfalls that boards should avoid when designing plans.
Key Takeaways:
00:00 Introduction.
02:00 Annual incentives are defined by timeframe rather than form of compensation.
03:32 Selecting performance metrics involves aligning with priorities and benchmarking.
09:39 Payout structures should follow a range rather than extremes.
11:14 Thresholds and maximums are common features in payout design.
13:02 Plans may include modifiers or adjustments to drive specific behaviors.
14:08 Sharing ratios are useful for evaluating profit distribution.
15:11 Measuring individual performance at senior levels presents unique challenges.
Resources Mentioned:
https://www.linkedin.com/in/jared-berman-3950884/
Meridian Compensation Partners, LLC
https://www.linkedin.com/company/meridian-compensation-partners-llc/
This episode is brought to you by Meridian Compensation Partners, LLC. Learn more by visiting MeridianCP.com.
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