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Dan I love reading your New Compensation Cafe monthly educational News. It always good to qestion this industry of ours.
I myself talked to the Lead HR person of LMSC, now known as Lockheed -Martin. Each one of the companies had their own plan of rewarding long times employees. Once they joined lots of problems came to the surface. Lockheed tried to do their best to keep and Reward their long times good employees by specials raises and Promotions. If you made it past ten years of employment you and the Company understood each other. The Rewards were a good retirement - up to 75 % of your wages. Martins idea were different hire the educated use them and let them proof to the company that they can keep themselves busy.
I fell under the old LMSC plan-the company took the lead and rewarded you-the new way is confusing, therefore your Organizations messages to re-educate or guide managements is wonderful! Thanks

OK I'll weigh in. At the risk of causing an uproar, I am thinking that long-term incentives meaning 5+ years don't really mean much anymore. With people having 5-6 jobs in the their career, the days of 10-15 years at one company are just dead. I know a lot of people reminisce about the "good old days" ---- but the reality is that is just what they are --- the good old days.

I think we could skip long-term incentives altogether and just have one-year and 3-year awards.

Just my 2 cents.

I had UK clients who were looking at medium-term incentives five or six years ago. As you state, they are looking for someting to cover the period before the stock options or performance share schemes kicked in, so 1-3 years.

The most common mechanism was the deferred bonus: compulsory or voluntary deferral of (usually) 50% of the annual bonus for 1-2 years, with an additional payment if additional performance targets were met.

Thanks for the comments.

It seems like I have pressed a nerve among many in the industry. Comments to this article here and on LinkedIn and other locations have been all over the board.

Clearly we do not have a solid consensus on the definition of "long-term". There is even some debate as to the definition of short-term (some people have stated STI can be as long as 3 years.)

Perhaps this is something we can agree to work on as professionals in the name of better communication and more effective compensation programs.

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