Chapter 13 - Managing for Shareholder Value

Tujuan Pembelajaran Mahasiswa mampu untuk: Menggunakan market value added untuk mengidentifikasikan nilai yang diciptakan untuk pemegang saham perusahaan publik Menaksir nilai perusahaan dengan menggunakan discounted free cash-flow model. Mengidentifikasikan pemicu nilai yang dapat dikelola untuk menciptkan nilai pemegang saham Mendefinisikan, menghitung, dan menginterpretasikan return on invested capital dan economic value added (EVA) Mendiskusikan struktur paket kompensasi manajemen dan isu-isu yang terkait dalam perancangannya

Pokok Bahasan Market value added Penilaian usaha – Kunci untuk menciptakan nilai pemegang saham Pemicu nilai Economic value added (EVA) Pembayaran untuk kinerja

Top Creators of Shareholder Value for 2001 ($ Millions) invested cost of MVA capital return capital Gen Elect 339,200 82,111 20.0% 9.4% Microsoft 325,872 26,343 21.5% 13.7% Wal-Mart 221,166 65,677 12.4% 8.9% Intel 169,980 41,397 9.0% 16.2% Citigroup 155,695 104,210 14.7% 12.0%

Market Value Added MVA = Firm Value - Invested Capital Firm value = market value of the firm’s outstanding debt and equity securities. Invested Capital = the sum total of the funds that have been invested in the firm.

Value Creation The combination of opportunity and execution. Opportunities must be recognized. Employees must be ready, willing, and able to take advantage of the opportunities.

Business Valuation: The Accounting Model Using the P/E ratio: If a firm’s P/E ratio is 20, then a dollar increase in earnings per share will create $20 in additional equity value per share. Problem: ignores R&D, which would reduce earnings per share, but should increase future earnings!

Business Valuation: Free Cash Flow Valuation Model Value = the PV of the firm’s projected free cash flows for all future years. Value = FCF + FCF + FCF + … + Terminal value ( 1+k)1 (1+k)2 (1+k)3 (1+k)n

Value Drivers Variables that managers can tweak to increase firm value. Examples: sales growth operating profit margin net working capital-to-sales ratio property, plant and equipment-to-sales ratio cost of capital

Economic Value Added Net operating weighted average invested EVAt = profit after - cost of x capital t-1 tax (NOPAT)t capital (kwacc) alternative definition: Return on weighted average invested EVAt = invested - cost of x capital t-1 capital (ROIC)t capital (kwacc)

Paying for Performance Shareholder and manager interests are aligned when: contributions of individuals and groups toward creation of shareholder value are measured using EVA, and rewards are structured accordingly.

Components of a Firm’s Compensation Policy base pay bonus: quarterly, semi-annual, or annual long-term compensation: options, grants

Designing a Compensation Program 1) How much to pay? 2) Base pay versus at-risk or incentive compensation 3) Linking incentive compensation to performance 4) Paying with a cash bonus versus equity

Penutup Tugas