Leonardoworx
Summary.
Total shareholder return (TSR) has become the definitive performance metric for public companies. As executive compensation has shifted over the past two decades away from grants of stock and options that vest with time to grants that vest with performance, TSR has become a critical element of governance and compensation and, therefore, of how firms are managed. TSR is sold as a neutral, market-based measure that captures value creation and can’t be manipulated by managers using accounting maneuvers. Are those claims justified?