In $2002,$ TXU, then Texas$$s largest electric utility, found itself in trouble. Its chairman and CEO, Earl Nye, had attempted to aggressively diversify the company, including by buying a gas utility in Texas and investing in electric utilities in the UK and Australia. This plan did not go well, and TXU$$s share price fell dramatically.

Although Nye managed to improve share prices somewhat in $2003,$ by early $2004,$ the board had decided it was time for a leadership change and C$.$ John Wilder$$the highly regarded former CFO of a Louisiana utility company$$became president and CEO. Nye remained chairman for another year, after which Wilder became chairman of the board in addition to CEO.

In his first$-$time role as CEO, Wilder laid out a plan to grow earnings per share at an exponential rate: $35\%$ over three years, in comparison with Nye$$s promised returns of $4\%$ to $6\%$ annually. It soon became clear that there was a new leader, a new plan, and new priorities for TXU.

When an analyst asked C$.$ John Wilder about his incentives as CEO of TXU, Wilder responded:

$$The vast majority of my compensation is based on absolute and relative TSR $[$Total Shareholder Return$].$ That$$s the way I wanted it$,$ that$$s the way the board wanted it$,$ and I am totally aligned with all the investors on this call.$$

What might be some effects of tying CEO compensation to shareholder returns?