Meridian Compensation Partners, LLC’s Post

Transcript

But we have seen some companies do this in Special Situations. So you know one example might be a turnaround situation where you want to set some stock price hurdles to get back to a more reasonable level of stock price perhaps where some of your investors bought in or or you know where the management team came in board and you kind of want to set those hurdles to set, get to a reasonable level. We've also seen in Special Situations where maybe there's a a moon shot grant or a special award that you're given to an executive team that might be in addition to the annual grant or a replacement of an annual. Grant that you want to set some stretch targets to get to a level of stock price performance or total show return that will be appealing to investors and make it worth the extra value that you're giving to the executives. So the challenge with that is with anytime you're an absolute TSR is those goals can easily become and very quickly become obsolete depending on what happens in out in the market in general. So you know I might set a goal of I want to get my stock prices at 10, I want to get to 1520 and 25, well in the market crashes and there's no way I'm going to get to 1520 and 25. For the market just goes on a run and it makes it very easy to get to 1520 and 25. So those goals can quickly become obsolete depending on what happens outside of your company. Where I've seen it also happen occur or be adopted as kind of as a modifier or a check to say you know is the underlying program working and is it creating alignment with performance. So this might be somewhat common approach would be a negative TSR cap to say we have this underlying measure, maybe it's relative TSR, maybe it's a financial metric, but if our absolute TSR. Negative, we can't earn above target period. And so it's kind of a check on that to say is there a reasonable alignment with shareholder, absolute shareholder return in the underlying long term incentive program.