Equilar, Inc., based in Redwood Shores, California, said the percentage of Fortune 250 firms regulating executive stock ownership hit an all-time high in 2006 of 80.9%, up from 73.9% the year before. Meanwhile, the prevalence of Fortune 250 companies with publicly-disclosed director stock ownership policies climbed to 77.6%, up from 70.6% in 2005.
Like ownership guidelines, the prevalence of executive holding requirements at Fortune 250 companies increased from 2005 to 2006, from 23.5% to 29%. Additionally, an increasing number of companies used both holding requirements and ownership guidelines, Equilar said.
The prevalence of director holding requirements at Fortune 250 companies increased from 2005 to 2006, rising from 12.6% to 14.9%.
In 2006, 79.7% of executive stock ownership guidelines defined ownership targets as a multiple of base salary, up from 74.7% the year before. In both 2005 and 2006, the second most common executive ownership guideline design set ownership targets as a fixed number of shares, according to Equilar.
The firm also reported that 59.4% of director stock ownership guidelines defined ownership targets as a multiple of annual retainer in 2006, down from 62% the year before. The Equilar research also found 50.9% of executive holding requirements at Fortune 250 companies were in effect only before ownership guideline targets were satisfied.
Equilar said new compensation disclosure rules from the Securities and Exchange Commission generated “a wealth of new information” about key practices related to stock ownership policies.
More information about the research is available here.