An incentive linked to stock performance can lead to executives dishonestly raising the price of stock and thereby obtaining a bonus and stock option, scandal that damages the company's reputation
Performance shares are allotments of company stock provided to managers and executives as a type of equity compensation, but only if specific company-wide performance requirements are reached, including earnings per share (EPS) targets.
In contrast to traditional stock-option plans, where employees receive stock options as part of their regular compensation, in the case of performance shares, the manager receives company shares or stock options as payment for achieving goals.
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