A Summary of the Article:
What used to be golden handshakes for retiring executives, along with the retirement parties and going-away gifts – have increasingly become executive and board wrestling matches.
We explain the current complexities in detail and give guiding principals that can help navigate the delicate balance of compensating retiring executives.
Companies can’t plan for every macro and micro permutation but they can create a baseline of principles to help boards and CEOs spend compensation dollars more efficiently and ensure alignment with market practices. GUIDING PRINCIPLES to create healthy executive retirements that serve the interests of all parties: 1. Retiree eligibility window 2. ‘Good leaver’ policy 3. Non-solicitation and non-compete agreements 4. In-flight, short-term incentive and long-term incentive payout guidelines 5. Develop LTI award guidelines for executives who provide retirement notice 6. Implement LTI award guidelines for unvested or unpaid LTI payouts
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