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Andrew McElheran Partner

Most organizations use some combination of annual and long-term incentives in their executive compensation plans.

Andrew McElheran, Partner and Lead Consultant at Meridian, explains the difference between annual and long-term plans.

Annual plans are designed to change executive behavior. Performance expectations rely on actionable indicators–executives know what they need to do at work to move toward those goals. Non-financial metrics are usually included in annual performance measurement.

Long-term incentive plans rely more heavily on financial performance, increasing alignment between executive performance and shareholder value.