Large U.S. companies have secured shareholder approval to set aside a record average of 11.81% of outstanding shares of company stock for incentive pay packages in 1996.
That's a 71% increase from the average of 6.9% reported in 1989, when Pearl Meyer & Partners, an executive compensation consultant, began studying share allocations. The firm calculated the share allocation for stock incentives based on 1996 annual reports and proxy statements of the 200 largest U.S. industrial and service companies.
Twenty-three companies in the survey group reserved more than 20% of average shares outstanding for equity incentives. Of these, five companies have allocations of more than 30%. Last year's average allocation was 10.96%.
Of 1996's average allocation percentage, 5.76% of shares outstanding have been previously granted and remain unvested/unexercised and 6.05% remain available for future grant.
Rhoda Edelman, managing director of the firm, attributed the gains to favorable accounting treatment for stock options, more incentive plans extending deeper into company ranks and a hot market.