Stock ownership by top corporate executives has surged.
Close to one-fourth - 22.6% - of 350 large industrial and service companies reported the use of executive stock ownership guidelines in their 1995 proxy statements, according to William M. Mercer Inc., compared with 15.4% in 1994 and only 6.9% in 1993.
The guidelines ranged from mild suggestions to outright requirements as to how much stock company executives should own.
"Increasingly, the expectation is that a company's top professional managers will own the organization's stock in meaningful amounts. For many executives, this will mean an investment equal to, or surpassing, the value of their homes," said Bram Groen, managing director.
Stock ownership levels, expressed as a percentage of an executive's annual salary are typically higher - say four to five times salary - for a chief executive than for other executives. For a president and chief operating officer they usually are three to four times salary, and for an executive vice president, two to three times salary.
Most companies give executives an average of five years to acquire the required number of shares.
Until the goal is met, the companies might require the executive's annual or long-term incentives be paid partially or fully in stock.