Calculating Total Shareholder Return

On the surface, the calculation of total shareholder return (TSR) seems fairly straightforward. However, as many companies that grant TSR awards have found out, TSR calculations can end up being tricky and error-prone due to the unique features found in grant agreements or when grant agreements are altogether silent on key definitions.

This issue brief explains how TSR calculations can become complex and seeks to lay a foundation of knowledge about the varying ways in which TSR can be specified. Companies issuing TSR awards should carefully review their grant agreements and make sure their process for tracking TSR is internally consistent and well controlled.

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