This study endogenously derives the optimal relative performance evaluation with multiple correlated peer performances, which also incorporates strong-form relative performance evaluation. Under this model, managers’ compensations are perfectly insulated against exogenous shocks in peer performances. The study introduces the role of public information regarding firms’ uncertainties in determining the optimal relative performance evaluation. Specifically, as more public information becomes available regarding a firm’s uncertainty, the firm will optimally assign smaller relative weights to peer performances, while the public information on the firm’s uncertainty has no impact on compensation contracting for other firms. While previous studies have interpreted light relative weights on peer performances as evidence against strong-form relative performance evaluation, this study demonstrates that under conditions of rich public information regarding a firm’s uncertainty, light relative weights on peer performances are indeed optimal.