From the Ayco Compensation & Benefits Digest: March 18, 2016
Share ownership guidelines remain a common feature in place at an overwhelming majority of public companies. The basic premise of mandating ownership of company stock is that the interests of senior management will more closely align with those of shareholders. In the current “say‐on‐pay” era, this is perceived to be of importance. Whether share ownership results in better corporate or stock performance remains to be proven.
We have been tracking the design of share ownership guidelines at Ayco corporate partners for the past 25 years. In the early 1990s, only about a quarter of the companies we monitored had guidelines, while over 90% of companies now have ownership requirements for senior executives – a percentage that has remained fairly constant over the past 10 years. What has expanded are those companies with share retention requirements related to their ownership guidelines. Most commonly, retention must be maintained until the minimum ownership levels are attained. The following reflect what we now see among the U.S. companies we monitor: