Performance shares, in the case of stock compensation, are shares of company stock given to managers only if certain company wide performance criteria are met, such as earnings per share targets.
The goal of performance shares is to tie managers to the interests of shareholders. Their goal is similar to employee stock-option plans, as they provide an explicit incentive for management to focus their efforts on maximizing shareholder value.
Note that in the case of performance shares, the manager receives the shares as compensation for meeting targets, as opposed to stock-option plans where employees receive stock options as part of their usual compensation package.
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