Articles

Design Features Affecting Relative TSR Award Values

Relative Total Shareholder Return (“Relative TSR”) awards are rapidly entering the mainstream. These innovative awards serve multiple purposes and constituencies – they create line of sight to senior executives, can span long time horizons, and are broadly accepted by governance agencies. However, unlike plain-vanilla stock options, Relative TSR awards can potentially have thousands of input assumptions, all of which interact in potentially non-intuitive ways.

This Issue Brief discusses the key design features that drive the fair value of a Relative TSR award to help human resources and accounting executives better plan and avoid surprises generated by this substantially more complex awards structure.

Don’t miss another topic! Get future Issue Briefs and other alerts from Equity Methods directly via email:

Subscribe