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Can performance restricted stock units deliver a better payday for executives?
Recent trends in the choice of long-term incentive vehicles have driven companies away from options to performance restricted stock units (PRSUs). This partly stems from ongoing pressure from proxy advisers and some institutional investors. In one study of S&P 1500 companies, the use of options in all companies declined from 77.2 percent in 2009 to 63.9 percent in 2013, while the use of performance-based equity rose from 45.5 percent in 2009 to 68.9 percent in 2013. A leading cause of this shift is that many organizations, including Institutional Shareholder Services (ISS) and Glass, Lewis & Co. LLC, consider PRSUs performance-based, unlike options.
This article by Seymour Burchman originally appeared in the September 2015 issue of Workspan published by WorldatWork.