What Is the Growth Shares Hurdle Rate?
A hurdle rate for growth shares is the minimum company valuation or return threshold that must be exceeded before growth shares receive any economic value.
(Growth Shares) Hurdle Rate Meaning
The growth shares hurdle rate centres on protecting existing shareholder value while rewarding future performance. To define hurdle rate in practice, it sets a baseline—often today’s company valuation plus a required return, above which growth shareholders begin to participate in exit proceeds or dividends. A clear growth shares hurdle rate definition ensures that managers or employees only benefit if the company grows beyond its current worth. This structure aligns incentives tightly with long-term value creation and avoids diluting existing shareholders for past performance.
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