Ben Burney spoke to the Chicago chapter of NASPP about trends in relative TSR. Topics covered include overall prevalence and peer group usage, among other topics. The presentation also included summary results of a Monte Carlo simulation of the S&P 500. The graphic depicts how companies in some sectors may be expected to outperform or underperform depending on market conditions.
Download the presentation here.
When you hear the words “Monte Carlo simulation,” do you:
b) Pack your suitcase—Mediterranean vacation! (Simulation? Nah!); or
c) Ponder the link between 19th century botany and modern valuation techniques?
If you chose a) and would rather b), read this Client Briefing to c).
Monte Carlo simulations are often only marginally understood by decision makers—and trying to comprehend them makes some want to scream. But while Monte Carlo simulations are complicated, the way we explain them does not have to be. This Client Briefing offers a plain-English guide to Monte Carlo simulations, which are used to value market-based performance awards (e.g., relative TSR). The goal is to help companies understand the implications of design choices on valuation outcomes in a conversational manner.
Click here to download the Client Briefing (PDF).