Managing for Success!


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Pay-for-Performance – STI, LTI, Commission Plans

PSG’s experienced team addresses all aspects of pay-for-performance as an integral part of the strategy in attracting, motivating and retaining high caliber executives and employees

Why is it important for your organization?

  • People are motivated to perform better when rewarded for superior performance.
  • A sound performance management system, integrated with pay-for- performance, results in higher productivity and performance.
  • Companies need reward systems that reward performance to attract and retain high caliber employees.
  • When companywide drivers cascade down the organization, divisions, departments and all employees are fully aligned; this means more effective planning and higher levels of performance.

Developing Long-term Incentive (LTI) Plans:

To attract, motivate, reward and retain talented C-suite and senior executives, PSG specialists design long-term incentive plans. While quoted companies are able to issue stock, easily traded on US stock exchanges, PSG recognizes the importance of maintaining competitive pay practices in both privately held and not-for- profit organizations.

  • Founders of privately held companies are generally unwilling to dilute ownership. Long-term deferred cash compensation, phantom stock, stock appreciation rights (SARs) and performance units are the available vehicles.
  • Plans are typically linked to performance over the long term with participants having a sense of equity in growing the business.
  • Vesting practices vary with opportunities for postponing exercise of rights, withdrawal of cash, etc. to avoid tax until retirement.
  • For not-for-profits, long-term deferred cash compensation plans are the way to go with awards tied to performance goals.
  • We advise on funding mechanisms to ensure availability at time of payout.
  • We prepare the plan documents that provide the procedures for administration of the plans.

Developing Short-term Incentive (STI) Plans:

  • PSG works with clients to determine who participates – executives, management, staff at all levels.
  • We review competitive set pay practices to determine the right mix of incentive to base salary, having reference to size and scope of responsibilities, impact of decisions, risks associated with the positions and other related factors.
  • We determine the mix of individual, team and company-wide performance, appropriate to level and function.
  • We develop the payout formulae for sales and all other positions, recognizing payout thresholds, payout levels for exceeding targets and the application of accelerators.
  • We integrate the process with the performance management, focusing on goals for department or division heads, and cascading them down the organization.
  • We project phasing in the incentive mix where additional at-risk compensation is required and project the additional costs where relevant.
  • We facilitate communication of the plan and/or train the trainers.

The process is highly collaborative, ensuring that management is comfortable with the approach in meeting their needs.

Sales Commission Plans: PSG refines commission plans (and frequently combines multiple plans) to drive desired performance and behaviors and develop higher rewards for superior performance.

  • We integrate principles of incentive plan design, including weighting of goals, thresholds,accelerators and continuing payouts after achievement of targets.
  • Where appropriate, we convert commission plans to incentive plans to manage performance more effectively.

Contact Performance-Solutions-Group, Inc.

For more information, please contact us at (203) 987-3338 or info@performance-solutions-group.com

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