The Market-Adjusted Performance Indicator (MAPI) measures the performance of a company’s management using a relative performance indicator designed to capture management performance as holistically as possible by covering both short-term success and long-term impact. The MAPI is an important element for targeted

corporate governance Corporate governance is defined, described or delineated in diverse ways, depending on the writer's purpose. Writers focused on a disciplinary interest or context (such as accounting, finance, law, or management) often adopt narrow definitions ...

Bengt Holmström Bengt Robert Holmström (born 18 April 1949) is a Finnish economist who is currently Paul A. Samuelson Professor of Economics (Emeritus) at the Massachusetts Institute of Technology. Together with Oliver Hart, he received the Central Bank of S ...

, with his economic research and his findings, for which he was awarded the

Nobel Prize for Economics The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...

in 2016, laid the theoretical foundation for the application of a relative performance indicator. It states that top management should be incentivised with a long-term relative performance indicator for its variable compensation. In the context of a research project of the

University of Zurich The University of Zürich (UZH, german: Universität Zürich) is a public research university located in the city of Zürich, Switzerland. It is the largest university in Switzerland, with its 28,000 enrolled students. It was founded in 1833 ...

under the direction of

Ernst Fehr Ernst Fehr (born 21 June 1956 in Hard, Austria) is an Austrian-Swiss behavioral economist and neuroeconomist and a Professor of Microeconomics and Experimental Economic Research, as well as the vice chairman of the Department of Economics at the ...

, the MAPI was developed and implemented with the consultancy firm Fehr Advice & Partners. To do this, a listed company’s

total shareholder return Total shareholder return (TSR) (or simply total return) is a measure of the performance of different companies' stocks and shares over time. It combines share price appreciation and dividends paid to show the total return to the shareholder express ...

(TSR) is compared with the TSR of a customised, relevant peer group. 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. This makes management performance transparent. Ernst Fehr and

Adriano B. Lucatelli Adriano B. Lucatelli (born 1966) is a Swiss entrepreneur and investor in the financial services industry. Life Adriano Lucatelli was born on 23 February 1966 in Uster near Zurich and is a dual citizen of Switzerland and Italy. His father’s sid ...

calculated the MAPI for all the firms in the Swiss Performance Index. The compensation model of the Liechtensteinische Landesbank is mainly based on the concept of the MAPI.''Fachjury wählt Honorierungspolitik der LLB auf Platz eins''
Liechtensteinische Landesbank 23 March 2017

References

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