It states that top management should be incentivised with a long-term relative performance indicator for its variable compensation.
This way external market shocks, for which the management should be neither rewarded nor penalised, can be excluded.
The difference between the TSR of the company and that of its peer group provides insights into the actual performance of the CEO and top management.
Ernst Fehr and Adriano B. Lucatelli calculated the MAPI for all the firms in the Swiss Performance Index.
[2] The compensation model of the Liechtensteinische Landesbank is mainly based on the concept of the MAPI.