High-performing companies approach executive compensation differently from other companies, says a study by Towers Watson. The study shows high-performing companies often take the road less traveled, designing their executive compensation programs in ways that vary from market norms. Their compensation designs are tailored based on their size and unique business needs and are longer term and more return-focused. While generally targeting the market median, these companies reward high performance through more leveraged incentive plan designs, including options, which actually translate to a high return on investment for shareholders. Towers Watson says market norms remain an important reference point for all companies to consider in assessing and designing their compensation programs. At the same time, the results of the research on executive pay practices in high-performing companies reinforce the notion that companies should resist the pressure to conform to a one-size-fits-all design that may not be the best fit for each individual organization.
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