Create More Value

Donald Chew, author and editor-in-chief of the Journal of Applied Corporate Finance, discusses the life and legacy of the late Professor Michael Jensen, a pioneering figure in financial economics. We explore Jensen's work on agency costs, corporate governance, and executive compensation, as well as his later focus on corporate culture. The conversation highlights Jensen's profound impact on how US corporations and capitalism create value today.

Steve O’Byrne is among the most knowledgeable experts on executive pay practices, hands down. He shares his insights on the evolution of performance measurement and executive pay, from the fixed profit-sharing models of the 1920s to today’s market-based compensation packages. We explore the use of option grants, EVA, private-equity models, and even Steve’s most recent innovation, Employee Value Added. Steve is president of Shareholder Value Advisors with over 30 years’ consulting experience in compensation, performance measurement, and valuation.

Our discussion with Dr. Anastassia Lauterbach explores the transformative power of AI, discussing its potential across industries, the impact of the European AI Act on innovation, and its implications for corporate executives and boards. She said, “Around 2012-2013, digital assets made up about 12-14% of the valuation of large businesses. After COVID, that number jumped to 90%...  What does it mean for the competitiveness of your company?”  For those interested in creating more value at their companies, Dr. Lauterbach is someone to listen to.

Value management means applying objective valuation principles to strategy, resource allocation, and performance measurement processes to deliver sustained returns for shareholders and other stakeholders. In this episode, Fortuna Advisors' CEO Greg Milano discusses the very innovative approach Fortuna Advisors takes to value-based management, focusing on the key tenets of creating an “ownership culture” within companies.

Dr. Mark Frigo, professor and founding director of the Center for Strategy Execution and Valuation at DePaul University, discusses the importance of long-term value creation and the application of strategic life-cycle analysis, which characterizes businesses into one of four categories: high innovation, competitive fade, mature and failing. He highlights his collaboration with CFOs and executive teams to integrate strategy with performance measures, ensuring sustainable value creation. Dr. Frigo also covers brand valuation, the challenges of aligning finance and marketing, and the need for strategic leadership at the CFO level.

Kimberly Casiano, board member of Ford Motor Company, Mutual of America Financial Group, and the Federal Home Loan Bank of Atlanta, shares her story, from her early life in the South Bronx to becoming the first Latina on a top-five Fortune 100 board. Kimberly emphasizes the value of continuous learning, the power of honesty, the importance of nurturing genuine relationships, and the distinction between resume virtues and eulogy virtues.

Ramesh Karnani explains the importance of approaching strategy from a shareholder value perspective and considers some of the problems that can result when strategy is not supported by insightful financial analysis. He also explains how return on investment derives from a combination of industry economics and competitive position.  Ramesh’s insights draw from his decades of experience helping build the strategy consulting firm Marakon, as the leader of a strategic finance group in Credit Suisse’s investment banking unit, and as a Managing Director and Partner at the Boston Consulting Group. 

World-renowned Professor Anup Srivastava discusses the challenges of valuing, investing in, and developing intangible assets in today's corporate world. From the valuation of tech giants like Google and Facebook to the critical need for updated accounting frameworks, Professor Srivastava explains how “soft assets” like knowledge, algorithms, technology, and brand equity influence strategy, drive financial performance, and require rethinking traditional corporate governance practices.

Fortuna Advisors CEO Greg Milano discusses flaws in corporate incentive plans that encourage bad behaviors, from financial manipulation to more subtle agency costs that impact companies’ long-term performance. As the late Michael Jensen said, “It's not how much you pay that matters. It's how you pay." The conversation hones in on the use of Relative Total Shareholder Return (TSR), a measure whose volatility leads to poor linkage to actual performance and undermines executives’ confidence in their long-term incentive plans (LTIPs).  Want more insights from Executive Rewards experts at WorldatWork’s Total Rewards conferences? Purchase the Total Rewards’24 On-Demand Highlights package available through Sept 30, 2024 here, or lock-in your savings today and register to join WorldatWork in Orlando for Total Rewards ’25!

Sean Pelkey, CFO of CSX Corporation, discusses the railroad company’s stunning transformation in the face of stark headwinds and a devastating loss of business as the coal industry collapsed in the early 2010s. Starting in 2017, CSX effectively tripled its share price over five years. Now, the company is shifting from efficiency to a profitable growth mindset. In Q1 2024, their share price hit an all-time high, reflecting this strategy's early success. Behind this cultural shift towards growth was a renewed focus on differentiated service offerings and a shared goal of value creation. Sean and Greg’s discussion highlights leading through change, balancing competing metrics, and strategic capital allocation, while showcasing how determined leadership can thrive, even in tough circumstances.