Total Shareholder Return: How Long Is Long Enough?
Over the last decade, executive compensation programs have evolved from emphasizing stock options that have 10-year performance horizons to performance-based restricted stock with mid-term performance horizons—usually just 3 years long. While there are a wide variety of performance-based compensation designs in place, the single most popular performance measure is relative total shareholder return (TSR).
But how long should the relative TSR performance period really be? In CFO Magazine today, Eric Hosken of Compensation Advisory Partners and I share some ideas about the relationship between TSR performance periods and shareholder outcomes. You can read about it here.
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