Excess Return

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(ER).

A senior management performance measure which is based on the excess of the Actual wealth enjoyed by shareholders over the Expected wealth required by shareholders.

The Actual wealth of the shareholders is calculated from the market share price and the amounts and timing of cash dividends paid out to the shareholders.

The Required wealth of the shareholders is based on the amount and timing of their investment, and their required rate of return on investments of this company's level of risk.


See also