• Organizations incentivize executive employees with awards such as bonuses and stock options.

Bonuses and other awards are often determined by the performance goals in place and whether or not they are met. Incentive plans can take many forms, the most common being:

• Short-term bonuses (usually a one-year time frame) — often the greatest individual motivator.
• Long-term bonuses (more than one year — usually 3 to 10 years) — created to afford “holding power” over executives for a longer period; usually based on group performance goals.
• Stock options — rights to purchase company stock at a specified price during a specified time period; usually considered a long-term incentive.
• Restricted stock — stock is given to the executive who must wait for a specified period (usually three to five years) before selling it. Stock will be forfeited if termination occurs prior to the end of the restriction period.
• Stock Appreciation Rights (SAR) — the right to receive a dollar amount equal to the future appreciation of the company stock (rather than actual shares).