- What is your TSR aspiration? Is that aspiration appropriate given the expectations embedded in your stock price and the ability of your plans to deliver improved performance?
- How much growth do you need in order to deliver on that aspiration? What target revenue-growth rate is required in order to meet your goal given the momentum contribution of other TSR drivers?
- Will optimizing growth and margins in your existing businesses be sufficient to meet your goal? Or will TSR success require you to consider a more radical strategy?
- What drives the differences in valuation multiples in your industry? Will your growth plans enhance or erode your multiple relative to peers?
- Will your growth initiatives create more TSR than alternative uses of cash or capital? In particular, what would be the impact of increasing dividend payout rather than investing in growth?
- Is your investor mix aligned with your growth agenda? If not, do you have a plan for migrating to investors who are likely to be more closely aligned with your strategy?
- Is there a balance between your sustainable growth rate and the growth rate of your served markets? If not, what is your plan for effectively using excess cash to optimize TSR?
- How will today´s growth initiatives affect your ability to find growth and deliver superior TSR in the future? In particular, what will be the impact of your growth initiatives on your company´s average return on capital?
- Do you need to revisit your company´s TSR target and strategy in light of your answers to the above questions? If so, do you have a process in place for doing so?
- Are your management team, board, and investors aligned on the optimal role for growth in achieving your TSR objectives? If not, do you have a plan for creating such an alignment?
Source: Spotlight on Growth: The Role of Growth in Achieving Superior Value Creation / Eric E. Olsen, Frank Plaschke, Daniel Stelter / Boston Consulting Group (BCG), September 21, 2006
Subjects: CEO / Executive Questions, Finance Questions
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