Ten ways to create shareholder value ( Principle: Don't manage…
Ten ways to create shareholder value
Principle: Don't manage earnings
66% companies provide profit guidance to ws
Alternative strategies affect value
Strategies created the greatest value
Change in value over reporting period.
Vestment rates are below the cost of capital
Boost short earning
Destroying operation decisions
principle: Making strategic decision
Potential shifts, assumptions about technology life cycles, the regulation environment & other variables.
Evaluation and compare decisions
Mix of investments in operations are most active overall value
Principe: Make acquisitions
Day-to-day operation creates value
Bankers consider price/earnings
EPS short-terms comings
Management need to consider where, when & how in performances
Value-oriented managements evaluate risk
Principe: Assets that maximize value
Value-oriented regularly monitored
Estimated cash flows brands, real estate, detachable assets.
Performances against projections or competitors
Increasing value, research, design & marketing
Low value added activities (Manufacturing)
Principle: Returning cash shareholders
Limited value-creation investments, dividends & share buybacks
Risk management for value-destroying investments, ill-advised, overpriced acquisitions
Employee stock option programs
Companies shares no good for the long-term
Principle: Reward CEO's & long-term returns
Maximize potential returns
Motivating long-term, value-maximizing behaviour
Standard stoke reward performances
Value-conscious can overcome short coming
Discounting indexed-option plan or discounted equity risk option
Hold back dividends when no value-creating investment opportunities.
Principe: rewards middle managers & frontline employees
Time to market new product
Employee turn-over rate
Customers retention rate
timely opening of new stores or manufacturing facilities
For long-term potential.
Increase long-term shareholders returns
Principle: Reward operating-unit for multiyear value.
Structured stock rise performances
Stock price disappointing performance
Companies shares will increase to performances of other units
Companies have annual & three year incentive plans
SVA to forecasted operations cash flows & operating margins.
Setting budget-base thresholds
year-to-year performances improvements, peer benchmarking, expectations by the share prices.
Principle: Bear the risk of ownership
Focus on near-term then long-term results
Five times the annual base salary
Reprising, risk institutionalizing, subverts spirit & objectives
Cash in shares
Top managers play it safe
Balance between benefits
Principle: Information for invertors VRI
Companies financial reports
Reduce cost of capital and increase share prices
Corporate performance statement p 75
likely estimates, possible outcomes, detail of assumptions & risk, key performances