Ten ways to create shareholder value

  1. 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

  1. principle: Making strategic decision

Potential shifts, assumptions about technology life cycles, the regulation environment & other variables.

Value-creating opportunities

Evaluation and compare decisions

Strategic analysis

Mix of investments in operations are most active overall value

  1. 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

  1. 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)

  1. 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

  1. Principle: Reward CEO's & long-term returns

Maximize potential returns

Motivating long-term, value-maximizing behaviour

Standard stoke reward performances

Long-term motivation

Hopeless

Value-conscious can overcome short coming

Discounting indexed-option plan or discounted equity risk option

Hold back dividends when no value-creating investment opportunities.

  1. Principe: rewards middle managers & frontline employees
  1. 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.

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

  1. 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

Demand performances

Balance between benefits

  1. 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