Woolworths Holdings’ decision to reduce the weighting of total shareholder return (TSR) in calculating long-term incentives for its executives has sparked fears that the executives are not expecting a recovery in the share price. The retail group’s just-released annual report reveals the TSR weighting used to measure performance conditions for the performance share plan (PSP) has been cut from 50% to 20% and return on capital employed increased to 30%. This change will make the awarding of long-term bonuses less reliant on share price performance. The share price has been on a steeply downward trajectory since late 2015. The weighting of headline earnings per share remains at 50%.TSR calculates dividend payments and changes in the share price. The steady fall in the share price since it peaked at more than R100 in late 2015 and the below-target headline earnings in financial 2017 led to payouts on long-term incentives being reduced in 2016. In addition, none of the executive directo...
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