Boards around the world are searching for the “right” performance metrics, and the “right” way to set performance goals. While much of the focus is often on long-term awards, short-term metrics and targets can pose as much or even more of a challenge. Long-term programs are often based on relative performance measures, but short-term programs are more frequently based on absolute measures, and more often than not include earnings measures. To investors, performance award details, including the choice of metrics, the setting of target goals, and the actual achievement of results provide powerful insights into the board’s performance expectations and how the board motivates management Using proprietary data, ISS Incentive Lab evaluates goal achievement and actual performance results for annual incentive awards to gain some insight into the effectiveness of various awards.

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