Skip to content

Mihir Desai, Mark Egan & Scott Mayfield, A Better Way to Assess Managerial Performance, 100 Harv. Bus. Rev., March–April 2022, at 134 (2022).


Abstract: Total shareholder return (TSR) has become the definitive metric for gauging performance. Unlike accounting measures such as revenue growth or earnings per share that reflect the past, TSR is based on share price and thus captures investor expectations of what will happen in the future, which is its chief attraction. The problem is that TSR conflates performance associated with strategy and operations with that arising from cash distributions (dividends and buybacks). In this article, the authors discuss the distortions embedded in TSR and propose a new metric, core operating shareholder returns, that emphasizes operational performance. It also provides a comprehensive assessment of the buyback revolution—and the verdict is quite damning.