TSR Performance Tracking: Managing the Peer List

As relative total shareholder return (“Relative TSR”) awards have become widespread and increasingly elaborate, compensation, HR, finance, and accounting professionals face major challenges in accurately tracking and communicating the performance of their companies’ awards. Unclear or untimely communication on the status of the performance of TSR awards by HR/executive compensation can create confusion for plan participants and upsetting surprises for the Compensation Committee. Similarly, the complexity of post-grant performance tracking of Relative TSR awards spells risk for Accounting/Finance in calculating share counts for EPS under ASC 260.

This Equity Compensation Issue Brief (ECIB) will equip you with the knowledge necessary to understand complicating factors in post-grant TSR performance tracking, focusing primarily on dealing with changes to peer lists over time. The issues covered in this paper are important to Executive Compensation, HR, Accounting/Finance, and plan participants.