TSR, Executive Compensation, and Firm Performance
No Access Until
• Particularly since the recent recession, the general public and policy makers have been interested in aligning the incentives of executives with the incentives of shareholders. • Embedding Total Shareholder Return (TSR) target metrics into top executive compensation plans have been described as a simple and direct tool to align incentives. • Despite the increased popularity of such TSR plans, the empirical evidence supporting the expansion of this compensation strategy is limited. • This brief aims to shed light on whether the inclusion of TSR measures in long-term incentive plans result in improved firm performance.