Data & Research January 17, 2012

Equity Compensation Plans Continue Shift from Stock Options

Companies continue to shift away from stock options and other “appreciation” awards toward a greater emphasis on full-value awards in their equity compensation plans.
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Full-value awards now comprise 47% of the number of shares granted and 75% of the grant-date fair value of all equity awards at the typical company, compared to 29% of the shares granted and 57% of the value five years ago, according to Towers Watson’s annual study of equity incentive programs at Fortune 500 companies.  

The median dollar value of equity award programs across Fortune 500 companies increased by 29% in 2010, putting the median value just slightly below 2008 levels. Over the same period, the median Long-Term Incentive (LTI) fair value as a percentage of average market capitalization decreased by 5% at Fortune 500 companies as the market recovery outpaced the increase in award values.   

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Equity plan participants at Fortune 500 companies in aggregate exercised 90% more options and other appreciation awards in 2010 than in 2009. This increase was attributable to improved market conditions and contributed to a reduction in overhang from 10.0% to 9.7% at the median.  

Results of the study are here.

Deals & People January 17, 2012

Kidder Benefits Consultants Acquires Lane & Associates

Kidder Benefits Consultants acquired Lane & Associates and created a new entity called Kidder-Lane Actuarial Services LLC.
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Doug Lane, former principal of Lane & Associates, agreed to be president of the new company and retains an ownership interest. Keith Gredys is chairman and CEO.

“Skilled actuarial services are required in the design and implementation of defined benefit and cash balance plans, and we have enjoyed a strong working relationship with Lane & Associates for nearly 15 years,” said Gredys. “Bringing this accomplished actuarial team inside the Kidder organization enhances our ability to serve our growing base of defined benefit and cash balance clients.”

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In addition to serving Kidder clients, the new firm will continue to provide actuarial services to outside third-party pension administrators and individual plan sponsors.

“The higher contribution opportunities available in defined benefit and cash balance plans are very attractive to sponsors and participants seeking to optimize their retirement savings,” said Lane. “We are seeing significant growth in these specialized types of plans, and joining the Kidder organization gives us greater access to the systems and resources required to serve them.”

 

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