The pursuit of shareholder value has become so important to automakers, suppliers and retailers that this special report measuring changes in shareholder value will become a regular feature.
Each quarter, Automotive News, in cooperation with PriceWaterhouseCoopers, will present an index of total shareholder return, or TSR, which is the best measure of shareholder value.
As calculated by PricewaterhouseCoopers, total shareholder return measures the actual growth in value of an investment over a specific period expressed as a percent. It includes the growth in market capitalization or total value of the company, plus dividends. The calculation assumes that all dividends are reinvested to purchase additional shares.
The Automotive News/PricewaterhouseCoopers Total Shareholder Return Index is calculated separately for the publicly owned companies in three automotive sectors: automakers, suppliers and dealer groups.
1. The automaker group includes the world's 10 largest light-vehicle manufacturers.
2. The supplier group includes global suppliers with market capitalization of at least $200 million and with more than 50 percent of revenue in OEM automotive parts. Companies whose stock prices were run up by takeover activity were excluded.
3. The retailer group includes all publicly traded companies that owned and operated new-vehicle dealerships in the United States during the period.
The Total Shareholder Return index for each sector is calculated by average total shareholder returns for a group of publicly traded companies in that sector. The average is weighted by market capitalization, which is the value of a company's share price times the number of shares outstanding. In this way, the performance of the companies with larger market capitalization has a greater impact on the index.
Each company's total shareholder return is measured by taking account of the movement of its share price, stock splits and stock buybacks as well as reinvestment of any cash dividend.