Archive for February, 2013

Selecting the Peer Group for a TSR Program: Real Performance or Risky Business?

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The popularity of Relative TSR programs as long-term incentive plans for senior managers is due in large measure to a number of commonly acknowledged assumptions, or “conventional wisdom.”

  • Management will be incentivized to outperform their peers in a given industry when measured by the overall return of their employers’ shares over a fixed performance period. The choice of metric is assumed to align the interests of management with the interests of shareholders.
  • The choice of an appropriate peer ...
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