Impact of TSR Component on Executive Compensation

XYZ Corporation has recently conducted a review of its executive compensation plan to ensure it aligns with shareholder interests and promotes long-term value creation. One aspect of this plan is the structure of performance-based bonuses for the executives. The compensation committee is considering introducing a new variable that will tie these bonuses more closely to the company’s total shareholder return (TSR) over a multi-year period.

Which of the following statements best describes the potential impact of implementing this TSR-based component in the compensation plan?