While relative Total Shareholder Return (TSR) may at first appear to be a useful incentive measurement, there are numerous drawbacks to its use.
This article summarizes recent research from Pearl Meyer and the Cornell University ILR School’s Institute of Compensation Studies. The data shows that TSR is not effective as an incentive metric and doesn’t lead to improved firm performance.
So what can Boards and Compensation Committees do if they want to move away from this ineffective incentive measurement?
Pearl Meyer President and CEO David Swinford offers five points for consideration that can lead to more robust compensation programs designed to create long-term shareholder value.
