Performance shares are stocks awarded to executives as a form of recognition when the company successfully accomplishes a predetermined goal or objective. These stocks serve as a means for companies to motivate their executives to actively contribute towards achieving the company’s objectives. In essence, if the company performs well, the executive is granted stocks as a reward.
Performance shares are stocks given to executives as a form of recognition for achieving specific performance goals set by the company. These goals can be related to financial performance, growth, or other important performance indicators. For instance, if a company reaches a certain level of revenue growth within a specified time frame, the CEO may be granted performance shares as a reward. Similarly, a sales team may be offered performance shares if they achieve a particular sales growth or customer acquisition target. These examples demonstrate how performance shares serve as an incentive to motivate executives and employees to work towards specific objectives that align with the company’s overall strategy and goals.
Performance shares are a form of equity compensation given to employees based on the company’s performance over a specific period of time.
Performance shares are granted outright and do not require the employee to purchase them, while stock options give the employee the right to purchase company stock at a predetermined price.
Performance shares are typically taxed as ordinary income when they vest, based on the fair market value of the shares at that time.
The treatment of performance shares upon leaving the company varies depending on the terms of the grant and the reason for departure. It is important to review the specific terms of the performance share agreement.
Performance shares are typically not transferable and cannot be sold until they have vested.
Performance metrics can vary widely, but common ones include company revenue, earnings per share, and total shareholder return.
The value of performance shares is typically based on the fair market value of the company’s stock on the date of grant.
Performance shares can be forfeited if the employee leaves the company before they vest or if the performance goals are not met.
Yes, performance shares are often subject to vesting schedules, meaning they are not fully owned by the employee until certain conditions are met.
Performance shares can align employees’ interests with those of the company and provide a potential financial reward based on the company’s performance.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/performance-shares/
- Modern Language Association (MLA):Performance Shares. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/performance-shares/.
- Chicago Manual of Style (CMS):Performance Shares. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/performance-shares/ (accessed: May 09 2024).
- American Psychological Association (APA):Performance Shares. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/performance-shares/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts