Performance criteria of corporate option and long‐term incentive plans: a survey of 150 UK companies 1994‐1998

A substantial number of companies now operate long‐term incentive schemes as a means of motivating executive directors to improve corporate financial performance and thus align their interests more closely with those of the company’s shareholders. This paper presents an empirical study of the option/long term incentive plans (LTIP) performance criteria used by a sample of UK companies to illustrate current practice and provides details of the importance of performance‐related remuneration in overall executive remuneration packages.