Sixty-one percent of private employers offer long-termincentives while 95 percent provide short-term incentives,according to a recent study by WorldatWork and VivientConsulting.

The survey also finds that having a long-term incentive plan iscommon practice across all private for-profit corporations with theexception of partnerships. Although there are challenges regardingvaluation and liquidity, long-term incentive use has grown from 35percent in 2007 to 61 percent in 2011.

“Private companies face unique incentive compensationchallenges,” says Kerry Chou, a WorldatWork certified compensationprofessional and practice leader. “The jump from 35 percent to 61percent in four years was significant and reflects the need forprivate companies to compete for senior/executive-level talent withboth private as well as publicly traded companies.”

Short-term incentive programs have also grown since 2007 from 79percent to 95 percent.

“On the short-term incentive side, we saw an increase in the useof individual incentives and team/unit/small-group incentives,”says Bonnie Schindler, partner and co-founder at VivientConsulting. “Spending on incentives as a percentage of operatingincome stayed constant overall from 2007 to 2011. This indicatesthat private companies are focusing their incentive dollars onspecific key players with specific objectives in mind. Privatecompanies are being smart and strategic about their compensationdollars.”

Short-term incentives that are now prevalent include bonuses at88 percent, individual incentive plans at 39 percent,profit-sharing plans at 19 percent, and team/unit/small-groupincentives at 26 percent. Among common types of long-termincentives are performance awards or long-term cash plans at 52percent, phantom stock and stock appreciation rights at 33 percent,stock at 26 percent and restricted stock at 19 percent.