The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Fri, 05 Jun 2026 16:08:54 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Beyond the PSU Mandate – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Beyond the PSU Mandate https://corpgov.law.harvard.edu/2026/04/04/beyond-the-psu-mandate/?utm_source=rss&utm_medium=rss&utm_campaign=beyond-the-psu-mandate https://corpgov.law.harvard.edu/2026/04/04/beyond-the-psu-mandate/#respond Sat, 04 Apr 2026 11:30:51 +0000 https://corpgov.law.harvard.edu/?p=180017?d=20260403171404EDT Posted by Voytek Sokolowski, FW Cook, on Saturday, April 4, 2026
Editor's Note:

Voytek Sokolowski is a Principal at FW Cook. This post is based on his FW Cook memorandum.

A Compensation Committee Roadmap for Evaluating Long-Term Incentives in 2026

U.S. executive compensation has come to rely heavily on Performance Share Units (PSUs). PSUs are awards of stock units which are earned based on pre-established financial and/or market goals, most commonly measured over a three-year performance period. The widespread adoption of PSUs was partly driven by proxy advisor expectations to grant at least half of executive annual long-term incentives (LTI) in PSUs. Failure to comply invited criticism and a challenged Say-on-Pay outcome, a risk few Compensation Committees were willing to endure. The result was a homogenized landscape where, for some companies, proxy advisor compliance may have taken precedence over strategic alignment.

Has the pendulum swung too far toward PSUs? Some investors think so and, in 2026, proxy advisors have signaled greater flexibility toward alternative LTI structures. This article explores why the three-year PSU model is under pressure and provides a 2026 roadmap for Compensation Committees when evaluating LTI design for 2027.

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