Execs More Likely to See Holding Requirements

Equilar has released both the Executive and Director Stock Ownership Guidelines reports, and in an era of newfound corporate accountability, it’s not surprising to find that over 80% of Fortune 250 companies require them for CEOs and directors– nor is it surprising that these numbers continue to be on the rise. When it comes to the specific details of the ownership policy, however, things vary greatly between the two groups.

The first major difference is holding requirements. Most of the time, these are combined with ownership guidelines to create a double-strength package. A whopping 40.1 percent of CEOs are subject to them, but only 19.8 percent of directors have the same responsibility. Companies are obviously a lot more concerned about tightening the strings on their CEOs than on their directors– CEOs were required to meet a median ownership target of around $6 million, while the 2009 median for directors was a comparatively meager $262,850.

Directors also get more flexibility in the design of their ownership guidelines. The gold standard for CEOs is multiples of base salary (used by 82.2% of companies), followed by a fixed-number-of-shares target (12.6%). For directors, on the other hand, the design field has widened: while multiples of the retainer (54.8%) and fixed number of shares (23.9%) are still the most common strategies, they’re increasingly losing ground to setting a fixed value of shares (14.4%) or coming up with another, unique plan (7.7%), both of which have risen significantly in occurrence over the past three years.

Request the Executive or Director Stock Ownership Guidelines reports for the full details.