Re-Evaluating TSR as an Incentive

While there are many reasons for the rise in popularity of relative total shareholder return-based incentive plans, research from Pearl Meyer and Cornell shows that it’s a poor choice for a long-term incentive (LTI) metric.

Brett Herand outlines four points to consider when evaluating the use of TSR in an LTI plan:

• Understand the role it currently plays in your plan;
• Identify other value-drivers;
• Determine how alternative measures can be incorporated; and
• Effectively communicate the reasons for change.