Administration June 11, 2002

Stock-based Compensation Linked to Higher Shareholder Returns

November 30, 2000 (PLANSPONSOR.com) - The more stock-based compensation, the higher the total shareholder return, according to a new study by Hewitt Associates.
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The Hewitt Associates Ownership Intensity and Firm Performance Study found that from 1995 – 2000, the top half of companies surveyed had an average cumulative shareholder return that was 16% higher than the rest of the 173 companies.  In comparing the companies in the top 25% to the bottom 25%, the study found a return gap of more than 65% on average.

Hewitt surveyed 173 major corporations across the nation, ranking them using Hewitt’s “Ownership Intensity Index”, which is the ratio of a firm’s stock-based incentive compensation to its market value.

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The Hewitt Associates Ownership Intensity and Firm Performance Study is the first study to not only look.

– Nevin Adams          editors@plansponsor.com

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