Are Performance Shares Shareholder Friendly?

7 Pages Posted: 27 May 2020

See all articles by Marc Hodak

Marc Hodak

Hodak Value Advisors; New York University (NYU) - Markets, Ethics & Law (MEL) Program

Date Written: Summer 2019


Performance shares, or PSUs, have become the largest element of pay for top executives in corporate America. Their spread was ignited by institutional investors looking for more “shareholder‐friendly” equity awards—as opposed to restricted stock and stock options, which have been characterized as “non‐performance” equity. Although that characterization has been challenged by many directors and compensation professionals, proxy advisers like Institutional Shareholder Services have continued to insist that the majority of stock be granted based on performance, compelling public companies to conform to that standard. With over a decade of experience with PSUs, the evidence is in regarding their net effect:. Given these findings on PSUs, it is time for institutional investors and their proxy advisors to reconsider their view of these vehicles as “shareholder‐friendly,” and rethink their unqualified promotion of their use by the companies they invest in.

Suggested Citation

Hodak, Marc and Hodak, Marc, Are Performance Shares Shareholder Friendly? (Summer 2019). Journal of Applied Corporate Finance, Vol. 31, Issue 3, pp. 126-130, 2019, Available at SSRN: or

Marc Hodak (Contact Author)

New York University (NYU) - Markets, Ethics & Law (MEL) Program ( email )

New York, NY
United States

Hodak Value Advisors ( email )

New York, NY 10028
United States

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