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    Warren Buffett's CEO Metric

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    Yonas Teshale
    The document discusses Warren Buffett's BCOR (Buffett CEO-Owner Return) metric, which measures a CEO's performance by comparing the company's total shareholder return to a passive S&P 500 investment over the same period. The BCOR is calculated using the company's TSR, capital employed, and adjusts for industry and market risk. A BCOR over 100% indicates the CEO created more value than the S&P 500, while under 100% means less value. The BCOR takes into account financial performance, risk level, and capital usage, though not cultural or sustainability factors. Some CEOs with very high BCORs creating significant shareholder value include Jeff Bezos, Charlie Munger, and

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    Warren Buffett's CEO Metric

    Uploaded by

    Yonas Teshale
    18 views1 page
    The document discusses Warren Buffett's BCOR (Buffett CEO-Owner Return) metric, which measures a CEO's performance by comparing the company's total shareholder return to a passive S&P 500 investment over the same period. The BCOR is calculated using the company's TSR, capital employed, and adjusts for industry and market risk. A BCOR over 100% indicates the CEO created more value than the S&P 500, while under 100% means less value. The BCOR takes into account financial performance, risk level, and capital usage, though not cultural or sustainability factors. Some CEOs with very high BCORs creating significant shareholder value include Jeff Bezos, Charlie Munger, and

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    The document discusses Warren Buffett's BCOR (Buffett CEO-Owner Return) metric, which measures a CEO's performance by comparing the company's total shareholder return to a passive S&P 500 investment over the same period. The BCOR is calculated using the company's TSR, capital employed, and adjusts for industry and market risk. A BCOR over 100% indicates the CEO created more value than the S&P 500, while under 100% means less value. The BCOR takes into account financial performance, risk level, and capital usage, though not cultural or sustainability factors. Some CEOs with very high BCORs creating significant shareholder value include Jeff Bezos, Charlie Munger, and

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    18 views1 page

    Warren Buffett's CEO Metric

    Uploaded by

    Yonas Teshale
    The document discusses Warren Buffett's BCOR (Buffett CEO-Owner Return) metric, which measures a CEO's performance by comparing the company's total shareholder return to a passive S&P 500 investment over the same period. The BCOR is calculated using the company's TSR, capital employed, and adjusts for industry and market risk. A BCOR over 100% indicates the CEO created more value than the S&P 500, while under 100% means less value. The BCOR takes into account financial performance, risk level, and capital usage, though not cultural or sustainability factors. Some CEOs with very high BCORs creating significant shareholder value include Jeff Bezos, Charlie Munger, and

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Warren Buffett's CEO metric

    Warren Buffett's CEO metric, also known as the Buffett CEO-Owner Return (BCOR) metric, is a way of
    measuring the performance of a CEO by comparing the company's total shareholder return (TSR) to that of a
    passive investment in the S&P 500 index over the same period. The metric was developed by Warren Buffett, the
    chairman and CEO of Berkshire Hathaway, and is considered to be one of the most accurate measures of CEO
    performance.

    The BCOR metric is calculated using the following formula:

    BCOR = ((TSR - S&P 500 return) / (company's capital employed)) * 100%

    A BCOR of more than 100% indicates that the CEO has created more value for shareholders than a passive
    investment in the S&P 500. A BCOR of less than 100% indicates that the CEO has created less value for
    shareholders than a passive investment in the S&P 500.

    The BCOR metric is a useful tool for measuring CEO performance because it takes into account the following
    factors:

     The company's overall financial performance: The BCOR metric is based on the company's TSR, which is a
    comprehensive measure of financial performance that takes into account both stock price appreciation and
    dividends.

     The company's risk: The BCOR metric is adjusted for the risk of the company's industry and the overall market.
    This is because a CEO of a company in a high-risk industry should not be penalized for the higher risk of its
    industry.

     The company's capital employed: The BCOR metric is divided by the company's capital employed, which is a
    measure of the amount of capital that the CEO has used to generate TSR. This is because a CEO who has
    generated TSR with less capital should be considered to have performed better than a CEO who has generated
    TSR with more capital.

    The BCOR metric is not without its limitations. For example, it does not take into account the CEO's contributions
    to the company's culture, its employee morale, or its long-term sustainability. However, it is still a valuable tool for
    measuring CEO performance, especially when used in conjunction with other measures.

    Here are some examples of CEOs who have high BCORs:

     Jeff Bezos, CEO of Amazon, has a BCOR of over 10,000%.

     Charlie Munger, vice chairman of Berkshire Hathaway, has a BCOR of over 2,000%.

     Jamie Dimon, CEO of JPMorgan Chase, has a BCOR of over 1,000%.

    These CEOs have all created significant value for shareholders over their long careers. Their high BCORs are a
    testament to their leadership and their ability to make sound business decisions.

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