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Shareholder Value (Principle 1 (Do not manage earnings (Decreased…
Shareholder Value
Principle 1
Do not manage
earnings
Decreased Investment
Decreased spend on
value adding activities
Hit short term goals
Can destroy market value
Principle 2
Strategic Decisions
Maximise expected
value
Risk lower near
term earnings
Principle 3
Make Acquisitions
Maximise expected
value
Risk lower near
term earnings
Can create value
fast
Can destroy value
fast
Principle 4
Assets
Only assets that
create value
Sell underperforming assets
Outsource non value adding
activities
Principle 5
Return Shareholder
Cash
When no value
creating opportunities
Dividends
Share buy backs
Reduce risk of
destroying value
Principle 6
Reward CEO's
Long term returns
Indexed option plan
DERO
Discounted equity risk option
Principle 7
Reward Operating
Unit Executives
For superior
multiyear value
Principle 8
Reward Frontline
Employees
Principle 9
Executives Share
Risk
Of ownership
Restricted
stock plans
Principle 10
Value Relevant
Information
Provided to
Shareholders