What is Performance Shares ?

Definition of Performance Shares

Performance Shares

Performance Shares, in the situation of inventory settlement, are shares of organization inventory given to supervisors only if certain company-wide performance requirements are met, such as income per share objectives.

Performance Shares

The purpose of this is to tie supervisors to the interests of investors. Their objective is similar to worker stock-option programs, as they offer a precise motivation for management to focus their initiatives on increasing investor value. Note that in the situation of this, the manager gets the shares as settlement for meeting objectives, in contrast to stock-option programs where workers receive a share as part of their usual settlement package. It is a share which is likely to show capital growth, though perhaps not income. These are usually more risky shares than those that offer income.

 

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