- Do you have an explicit TSR target guiding your strategic plan? Is that target appropriate given the expectations embedded in your stock price and the ability of your business plans to deliver improved performance? Do you understand how each of your businesses will contribute to meeting your TSR goal?
- What are the historical sources of TSR for your company? How does your historical profile compare with that of your peers? How has the way you create value evolved over time? Are the company’s future sources of TSR likely to be similar to or different from those underlying your recent performance?
- What drives the differences in valuation multiples in your industry? Are investors discounting your multiple? If so, do you understand why and what to do about it? Are you experiencing multiple compression? How will your strategic choices affect your multiple in the future?
- What is your financially sustainable growth rate? Is it in balance with the estimated growth rates in the markets you currently serve? If not, what is the best way to deploy your excess cash?
- Is M&A a critical part of your corporate strategy? If so, do you know whether the deals you are considering will improve TSR? Have you set the appropriate financial hurdle rates for potential deals?
- What is the impact of your financial policies on your valuation multiple and TSR? Do you know their implications for your business strategy choices?
- Who are your dominant investors? Do you know their goals and priorities for value creation? Is your corporate strategy in sync with those goals and priorities? If not, do you have a plan for migrating to investors more closely aligned with your strategy?
- What are your key value-creation alternatives for the future? Do you have a robust process in place for analyzing these alternatives, debating their pros and cons, and creating alignment around the right path forward?
- Are your business strategy, financial strategy, and investor strategy internally consistent? Do they reinforce or contradict one another?
- Do you have a detailed corporate-strategy timeline describing how you will execute your strategy? Does it include the necessary internal development programs and external investor communications?
Source: Missing Link: Focusing Corporate Strategy on Value Creation | Boston Consulting Group (BCG)
Subject: CEO / Executive Questions