Six Ways to Link Sustainability and Value Creation

While not every sustainability-related investment has the potential to create value, taking full advantage of the ones that do is essential.

Gerry Hansell, Jeff Kotzen, Eric Olsen, Alexander Roos, Eric Wick, Ed Newman, Hady Farag

The theory that value creation comes solely from the act of making positive net present-value investments is of limited use in most modern public companies. Fundamentally, investors price a company’s shares on the basis of their views of the underlying business and the attractiveness of the available reinvestment opportunities. Because such expectations are priced into the stock today, the real value creation task confronting leaders … [ Read more ]

Ten Lessons from 20 Years of Value Creation Insights

In 1998, BCG published its first Value Creators Report, which ranked the top corporations on the basis of the value they’d created over the previous five years and also attempted to draw out lessons from the winners. Since then, they have expanded their databases, refined their methodologies, and shared their perspectives annually. For the 20th report, they have now reassessed their cumulative experience and distilled … [ Read more ]

Value Patterns: The Concept

A CEO’s strategic and investment choices are calculated bets, made in a competitive and uncertain environment. When developing a strategy to create value, it pays to know your company’s starting position. BCG has identified ten such positions, or value patterns, that define the moves most likely to create value.

Fixing What’s Wrong with Executive Compensation

Furor over banker’s pay has put the spotlight on executive compensation. What appears to be a disconnect between executive pay and a company’s results has inspired renewed demands that companies “pay for performance.” The critics are on to something—and it isn’t limited to the financial sector. There is something wrong with the way most companies approach executive compensation. Before companies can fix it, however, they … [ Read more ]

Gerry Hansell, Lars-Uwe Luther, Frank Plaschke, and Mathias Schatt

There is one problem with all forms of variable pay—whether short term or long term, based on cash or on equity. There is always a fi nancial upside for executives (and sometimes that upside is quite high), but there is not an equivalent downside. To be sure, executives may not receive a bonus if they do not beat their targets in the company’s plan, … [ Read more ]

Treating Investors Like Customers

Recent financial scandals have created a crisis in the relations between public companies and their investors. Companies need to find ways to restore their credibility and reconnect with their investor base. Paradoxically, most good companies already have the right analytical tools at hand. Seen from the perspective of the financial markets, a company’s ultimate product is its equity. So, companies need to start applying to … [ Read more ]

Thinking Differently About Dividends

Many senior executives view dividends as a low priority on the strategic agenda. They’re wrong. The unique set of circumstances that made dividends unfashionable during the long bull market of the 1980s and 1990s is fast disappearing. In the current economic environment, dividends are an especially important lever for generating above-average shareholder returns. Revisiting a company’s dividend policy can also greatly improve the strategy debate … [ Read more ]