A new study of best practices in generating and sustaining shareholder value - the Shareowner Alignment Index (SAI) - documents the impact on shareholder value of consistent use of best practices in management, organisation and incentive compensation. Over 60 Global 2000 companies participated in the study, including top firms from the USA, Europe, Asia and Latin America.
Top performers in the study, termed ‘value-aligned’, produced total shareholder returns relative to peer companies of 16% per annum. Overall, the study found that companies which consistently deliver value to shareowners - share the following characteristics.
Analysis of the benchmark data uncovered many factors that contribute to the higher valuations accorded to value-aligned companies, within a framework of five major areas: leadership; incentive compensation; culture and organisation; decision-making, and management reporting.
Richard T Roth, managing director of Hackett Benchmarking & Research, which produced the study in association with Stern Stewart, said the SAI hammers home the fact that poor internal governance erodes the ability to make wise decisions, even among the most dedicated employees and boards.
A summary of the Shareowner Alignment Index is available at www.saisurvey.com