My recent experience suggests companies continue to move toward more share-based compensation for their executives. Cash compensation is declining in relative proportion to share-based compensation.  Also, the use of restricted stock and restricted stock units is expanding in relation to stock options.  This development is evident in the information technology sector as I have seen in my law practice advising executives contemplating or negotiating career moves.

 I just retrieved from my desk in-box a Stout Risius Ross, Inc. (“SRR”) Spring 2011 article, “Has Share-Based Compensation Entered the ‘New Normal’ Too?,” which confirms this movement in compensation practices.  In SRR’s study conducted by Messrs. Cory  J. Thompson, Jason M. Muraco, and Andrew J. Robinson, they note  that “[c]ompanies continue to shift away from solely issuing stock options, and instead are utilizing other share-based compensation awards that have either a time-,market-, or performance-based vesting criterion (e.g., restricted stock  and restricted stock units).”

This trend should delight corporate reform activists who have been pushing for appropriate compensation incentives tied to actual performance of executives and to executives’ long term skin in the game.