Stock ownership guidelines are an important part of most companies' compensation programs which requires an employee to maintain ownership of a predetermined amount of company stock. By establishing stock ownership guidelines, companies help create an ownership mentality and interest among their employees which helps strengthen the alignment between the long-term interests of the executive and the shareholders. Additionally, the guidelines can help minimize risk-taking aimed at creating short-term stock price gains at the expense of long-term value creation. Among S&P 100 companies, CEOs are typically required to own five times or more of their salary in company stock and other named executive officers are expected to hold three times salary or more. The guidelines are often enforced by requiring employees to retain a certain percentage of equity compensation after restricted stock vests or stock options are exercised, net of taxes, until the ownership levels are reached. The guidelines typically apply until an executive is near retirement and in some cases extend into retirement. The Center believes stock ownership guidelines are an important part of an effective executive compensation program to align the interests of executives and shareholders.