Performance-based equity programs aim to drive corporate, group, and individual performance through linking equity awards to measurable performance metrics. Common metrics include total shareholder return, revenue growth, and profitability measures. Programs can take various forms, from awards triggered solely by performance to awards with vesting contingent on achieving performance thresholds. Well-designed programs with clearly defined and communicated metrics can be an effective incentive, but complex multi-year programs pose challenges to ensure goals do not motivate unintended behaviors.

1. Why Performance Matters The reality of performance in the world of equity Presented by Dan Walter, Performensation Consulting Peter Djokovich, Strategix 20/20

14. Pros and Cons of Performance Equity May need crystal ball in structuring multi-year approach Flexible structure May become a demotivator Can be used as a retention tool Motivates employees to drive specific performance Motivates employees to drive specific performance Cons Pros

17. Performance Shares: Mature Vs. Non-Mature Companies Executives can manufacture results , but difficult to guarantee results Harder to manufacture false performance , but easier to create “guaranteed” results May be Acquisitive? Minimal Acquisition Activity? This depends largely on industry and current market conditions Hard to make meaningful fin ancial targets due to lack of predictability (recruitment, innovation and product delivery can be measured) Can determine meaningful target metrics Non-Mature Mature