2021 Incentive Plans Will Look A Bit Different | WorldatWork

Talent Management

As organizations evaluate their annual and long-term incentive plans for 2021 in light of the pandemic, there are several options that they will need to consider. And while each organization will have a unique situation (e.g. some organizations are still in recovery phase or survival mode whereas others are in growth mode), this article provides a few tactics that organizations can use, including Change performance measure mix. Place a higher weight on EBITDA and a lower weight on revenue. Consider relative performance measures. Gauge performance relative to peers to determine how well the company is performing. Adjust the long-term incentive mix. Increase the percentage of time-based restricted stock in the mix. “The lower risk of the pay mix could be offset with longer vesting periods or backloaded vesting (50% after year two and 50% after year three), or adding holding requirements.” As organizations think through these and other options, they will need to consider how these decisions align with their talent philosophy and whether the changes are temporary due to COVID or more reflective of the longer-term business landscape.

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