30 Jul 2026

Aon guide: Relative TSR Awards in LTIPs: Key Design Decisions and Trade-offs

This report provides a practical, data rich framework for designing and governing relative Total Shareholder Return (TSR) based long-term incentive plans that are fair, competitive, and well-reasoned.

It highlights six core Relative TSR design decisions:

Comparator choice: Should performance be measured against an index or a custom peer group?
Payout schedule and regional norms: How do approaches differ across the UK, EMEA and US?
Dividend treatment: Should dividends be reinvested or accumulated in the TSR calculation?
TSR measurement approach: Should organisations use averaging periods or spot prices?
Currency choice: Should TSR be calculated in local currency or a common currency?
Peer group size: How does the number of comparators affect payout outcomes and volatility?

The choice depends on the balance a company wishes to strike between simplicity, relevance and governance.

Download the full report to find out:

56% of organisations use a custom peer group.
44% benchmark performance against index constituents.
In the US, index benchmarking is more prevalent, with approximately 61% of organisations using an index-based comparator.