Depressed stock prices have led to stock ownership compliance problems for
Depressed stock prices have led to stock ownership compliance problems for
LinkedIn Facebook Twitter Email Contact Card
Compensation in Context Newsletter
San Francisco
    New York
    Washington D.C

Strategies for Problematic Stock Ownership Timeline Requirements

Share This Email:
Share via Email Share on Twitter Share on Facebook Share on LinkedIn

November 4, 2020 

Thanks to Lynn Jokela

Depressed stock prices have led to stock ownership compliance problems for some companies and executives. Problems tend to occur under stock ownership guidelines that include a timeline requirement such as compliance with an ownership requirement within X number of years. For companies encountering this issue, the report provides a couple of strategies for consideration:
1) Remove the timeline requirement altogether and retain (or add) a retention requirement.
For example: require executives to retain 50% of their net-after-tax shares until compliance is achieved. Compliance becomes a moving target, whereby one does not “run out of time”. Companies should consider the impact that a high retention ratio has on executive liquidity.
2) Adopt a “once-met-always-met” provision.
Once an executive achieves compliance, the minimum number of shares that must be held to retain compliance becomes set (i.e., changes in share value are inconsequential, so long as the executive does not liquidate more shares than their required minimum).
As an example of a once-met-always-met provision, page 38 of Danaher Corporation’s 2020 Proxy Statement states: ‘Once an executive officer has acquired a number of Company shares that satisfies the ownership multiple then applicable to him or her, such number of shares becomes his or her minimum ownership requirement (even if the officer’s salary increases or the fair market value of such shares subsequently changes) until he or she is promoted to a higher level.’
    Veritas Executive Compensation Consultants, ("Veritas") is a truly independent executive compensation consulting firm.

    We are independently owned, and have no entangling relationships that may create potential conflict of interest scenarios, or may attract the unwanted scrutiny of regulators, shareholders, the media, or create public outcry. Veritas goes above and beyond to provide unbiased executive compensation counsel. Since we are independently owned, we do our job with utmost objectivity - without any entangling business relationships.

    Following stringent best practice guidelines, Veritas works directly with boards and compensation committees, while maintaining outstanding levels of appropriate communication with senior management. Veritas promises no compromises in presenting the innovative solutions at your command in the complicated arena of executive compensation.

    We deliver the advice that you need to hear, with unprecedented levels of responsive client service and attention.

    Visit us online at, or contact our CEO Frank Glassner personally via phone at (415) 618-6060, or via email at He'll gladly answer any questions you might have.

    For your convenience, please click here for Mr. Glassner's contact data, and click here for his bio.
    powered by emma