Executive Incentive Plan
About this form
The Executive Incentive Plan is a legal document that enables corporations to award restricted stock and units to key executive officers and senior management personnel. This form outlines the terms under which restricted stock can be granted, which imposes conditions on transfer and forfeiture based on employment status. Unlike other compensation agreements, this plan emphasizes promoting employee loyalty and aligning their interests with those of the company by offering long-term incentives in the form of equity.
What’s included in this form
- Purpose of the Plan: Promotes growth by offering additional compensation to key employees.
- Definitions: Clarifies terms such as Award, Board, Book Value, and Employee.
- Grant Details: Specifies how and when awards are granted, including conditions for restricted stock and units.
- Administration: Outlines the authority of the Board and Compensation Committee in managing the plan.
- Tax Considerations: Addresses potential tax obligations for distributions under the plan.
Common use cases
This form should be used when a corporation seeks to implement an Executive Incentive Plan to motivate and retain executives vital to the company's growth. It is particularly useful for organizations looking to offer long-term incentives that tie employee performance to shareholder value. Additionally, it can serve as a crucial tool during the negotiation of executive compensation packages.
Who this form is for
This form is intended for:
- Corporations planning to implement an Executive Incentive Plan.
- Executive officers and senior management personnel eligible for equity awards.
- Compensation Committees responsible for administering employee incentives.
How to prepare this document
- Identify the corporation and the Board of Directors responsible for administering the plan.
- Define the eligible employees who can participate in the plan.
- Specify the types of awards being granted, including the number of shares and vesting conditions.
- Determine the grant dates and incentive period for the awards.
- Include provisions for tax withholding, share dilution adjustments, and potential amendments to the plan.
Does this form need to be notarized?
In most cases, this form does not require notarization. However, some jurisdictions or signing circumstances might. US Legal Forms offers online notarization powered by Notarize, accessible 24/7 for a quick, remote process.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Typical mistakes to avoid
- Failing to clearly define eligibility criteria for the awards.
- Not updating the plan terms to reflect current tax laws and corporate policies.
- Neglecting to communicate the plan effectively to eligible employees.
Advantages of online completion
- Easy access to up-to-date legal language drafted by licensed attorneys.
- Quickly customizable to fit specific corporate needs and state regulations.
- Convenience of downloading and printing directly from a secure platform.
Legal use & context
- The Executive Incentive Plan is designed to comply with state and federal regulations regarding executive compensation.
- Restricted stock and units are subject to specific conditions, including employment and ethical considerations to ensure fairness and transparency.
- Understanding the tax implications is crucial for both the corporation and its executives to avoid penalties or misunderstandings with tax authorities.
Summary of main points
- The Executive Incentive Plan incentivizes key employees through restricted stock awards.
- Clear definitions and administrative guidelines are vital for effective implementation.
- The plan should be regularly reviewed and updated to stay in compliance with legal requirements.
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FAQ
One of the most popular ways to evaluate executive compensation is by comparing pay and performance. Unfortunately, many executives are given raises and bonuses even when their companies are faltering. Comparing pay to stock performance can help you determine whether executives are overpaid.
Income statement-related performance metrics (revenue, operating income) are typical of short-term incentive (STI) plans, whereas market-related metrics (total shareholder return, stock price appreciation) are relatively rare in STI plans but common in long-term incentive (LTI) plans, reveals a Mercer analysis of
According to the Center on Executive Compensation, "Executive pay arrangements typically consist of six distinct compensation components: salary, annual incentives, long-term incentives, benefits, perquisites and severance/change-in-control agreements."1 See High-Performing Companies Pay Executives Differently.
The annual Short Term Incentive (STI) component of the Plan provides participants with an opportunity to receive a non-base building cash incentive based on the achievement of specific annual financial, non-financial, and strategic objectives relative to the mission and goals of the UC Health enterprise.
The STI plan provides a performance based pay-at-risk portion of annual cash compensation to eligible employees.
Short-term incentives, also often referred to as annual incentives, are intended to compensate executives for achieving the company's short-term business strategy based on achievement of goals by the board compensation committee.
STI Bonus means the annual at target short-term incentive bonus the Executive is eligible to earn under the Employment Agreement, in accordance with the short-term incentive bonus plan; Sample 2. Based on 17 documents.
Step 1: Do Your Research. Step 2: Understand Your Value Is Not Tied to Your Current Compensation Level. Step 3: Remember That Executive Compensation Is Not Only About Salary. Step 4: Don't Be the First to Name a Price. Step 5: Be Prepared to Provide a Counter Offer.
Performance. One of the most popular ways to evaluate executive compensation is by comparing pay and performance. Unfortunately, many executives are given raises and bonuses even when their companies are faltering. Comparing pay to stock performance can help you determine whether executives are overpaid.
