Cravath Discusses Dollar Cost Averaging of Long-Term Incentive Grants

“Dollar cost averaging” is an investment strategy whereby investors spread a desired investment amount into periodic investments over a period of time, which mitigates the price risk inherent in investing the entire amount at an inopportune moment. Virtually all public companies grant equity-based compensation as the most significant portion of their executive compensation program. These awards provide an important link between executive and shareholder interests. Market practice is generally to grant these awards in “one shot” toward the beginning of the fiscal year, and the grants are, therefore, dependent on the share price at that moment in time. From time … Read more