Directorship
June/July 2008
Has the Pendulum Swung Too Far?
Matt Stinner, managing director of the Boston office of executive compensation consulting firm Pearl Meyer & Partners, said the use of peer groups is "extraordinarily difficult for some and easy for others. The strongest correlation is revenue, but you’ve also got to consider international complexity, market cap, growth rates, gross margins—and the more filters you add, the likelier you are to run out of companies." Stinner suggests defining peers based on relative performance: "That way, companies can come in and out of the peer group, depending on their performance relative to your own."
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