This paper provides a descriptive analysis of the use of performance targets in executive remuneration plans and its difficulty and attainability relative to past, expected and realised performance. From 31 December 2002, UK firms are required under the Directors‟ Remuneration Report Regulations (DRRR) 2002 to disclose performance targets and benchmarks used in executive remuneration plans in the Remuneration Report. This study uses the first instance of the disclosure of the targets and benchmark from the financial year 2002/3 for a sample of 1269 plans from 440 largest UK firms. Results indicate that earnings per share (eps) and total shareholder return (TSR) are the two most popular performance measures used in long term remuneration plans, while most firms provide vague information regarding performance measures in short-term (annual bonus) plans. More firms are using long term incentive plans (LTIPs) in place of share option plans relative to observations made by Conyon et al (2000). Plans that use eps as a performance measure often benchmark against growth relative to the retail price index (RPI) while plans that use TSR often benchmark against a peer group. For a sub-sample of 291 plans using eps as a performance measure, target attainability is analysed relative to past, forecasted and realised eps growth. Results indicate that targets set in executive remuneration contracts are highly attainable, with targets being met six times out of ten. The use of lower and upper threshold targets help control attainability, but less than half of plans specify an upper threshold target
