Abstract
When using one long-term incentive plan (e.g., stock options), one is able to neutralize the disadvantages of that plan by combining it with another long-term plan (e.g., stock awards). They are either independent of each other (aka stand-alone plans) or dependent on each other (aka tandem plans). The difference is that with the latter, the action taken under one plan reduces the benefits of the other plan. Plans are market value (company stock), nonmarket value (cash) or a combination of the two. The most common market value plans are stock awards and stock options; the most common nonmarket value plans are phantom stock plans.
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