Value Based Management Advisor

A publicly-listed company’s main objective is to maximize shareholder value in the long term.

Value is created only when the rate of return is higher than the cost of capital.

To create the maximum possible value for shareholders, the management must be committed to building value in relation to customers, suppliers, employees and local communities.

Ten Ways to Create Shareholder Value

Do not manage earnings or provide earnings guidance.

Make strategic decisions that maximize expected value, even at the expense of lowering near-term earnings.

Make acquisitions that maximize expected value, even at the expense of lowering near-term earnings.

Carry only assets that maximize value.

Return cash to shareholders when there are no credible value-creating opportunities to invest in the business.

Reward CEOs and other senior executives for delivering superior long-term returns.

Reward operating-unit executives for adding superior multiyear value.

Reward middle managers and frontline employees for delivering superior performance on the key value drivers that they influence directly.

Require senior executives to bear the risks of ownership just as shareholders do.

Provide investors with value-relevant information.

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