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10 Ways to Create Shareholder Value (1. Don't manage earnings/earnings…
10 Ways to Create Shareholder Value
1. Don't manage earnings/earnings guidance
Compromises value
Doesn't highlight company's value
Forego value-creating investment
Exaggerated reporting destroys market value
2. Maximise value at expense of lowering near-term earnings
:check: measure incremental value of future cash flows
:no_entry: Estimated impact on reported earnings
:check:Strategies > value
:check: Consider mix of investments
3. Make acquisitions that maximise expected value
Create value
Kill Value
Improve competitive position
4. Carry assets that maximise value
Reduce capital and invest in value adding activities
Outsource low-value adding activities
5. Return £ to shareholders when there are no credible value-creating opportunities to invest in
< Risk using £ on value-destroying investments
6.Reward CEOs/Senior Execs for long-term rewards
7. Reward operating-unit executives for adding superior multiyear value
8. Reward middle managers and frontline employees for delivering superior performance on the key value drivers that they influence directly
Develop leading value indicators
Quantifiable
Easily communicated
9. Require senior executives to bear the risks of ownership just as shareholders do
10. Provide investors with value-relevant information
< Short-term earning obsessions
Corporate performance statement