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Hi sir, when it comes to long term incentives such as share options and performance stock units (company shares), am I right to say the following ?
Both should be subject to meeting performance targets
Share options should have a vesting scheduled attached, whereby, only a certain number of options can be exercised each year.Otherwise, it can result in short termism practices.
Performance stock units(company shares) may be awarded with limits on their transferability for a set time. Otherwise, it can result in short termism practices.
Example : The director can only sell the shares when they retire.That is all fine.
The other thing that could be done with performance stock, is not to give them now, but to promise them for the future if a certain level of performance is reached.
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