Choosing the performance option* 2005 Global Equity Incentives Survey - Energy

Choosing the performance option* takes an inside look at equity compensation in energy companies around the globe. PwC' Global Equity Incentives Survey is one of the most comprehensive studies of the design and administration of equity incentive compensation plans for multinational companies and this report focuses on the energy companies that participated in the 2005 survey. The results give us a unique window both on trends in the energy sector and how these fit or diverge from the wider global multinational context.

The challenges facing energy companies across the globe are immense. Supply and demand imbalances, increasing reliance on remote energy sources, the quest for technological innovation and diversification in the face of climate change concerns, new market mechanisms, competitive pressures, mergers and acquisitions and an ageing workforce all heighten the need for companies to ensure that they attract and retain the very best talent and expertise. Companies are continuously reviewing changes to their compensation strategy to give themselves a competitive and performance edge. Providing competitive compensation while simultaneously managing employment costs is a key goal.

Many factors have encouraged companies to redesign their equity-based compensation programmes - newly emphasised sensitivity to accounting expense, heightened pay scrutiny, conserving cash and controlling dilution. But, are they really broken? Do companies need to redesign their current stock-based plans to continue to support their strategy just as well or better? And, what impact will changes in equity and long-term incentive compensation for the top executives have on reward strategies for the middle manager and broad-based employee group? How do the changes to the company' stock-based compensation plans impact the global organisation? Companies need to address these critical issues in order to tailor solutions to their organisations' unique situations.

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