Deep Misalignment Between Corporate Economic Performance, Shareholder Return And Executive Compensation

Deep Misalignment Between Corporate Economic Performance, Shareholder Return And Executive Compensation

IRRC Institute and Organizational Capital Partners - November 17, 2014

For the vast majority of S&P 1500 companies, there is a major disconnect between corporate operating performance, shareholder value and incentive plans for executives. New research details how an over-reliance on traditional short-term accounting metrics and total shareholder return obscures a line of sight to the underlying drivers of economic performance. As a result, economic performance explains only 12% of variance in chief executive officer (CEO) compensation.

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The New Economy - a New Paradigm for Managing for Shareholder Value

This paper by OCP partner Roland Burgman with Professor Göran Roos discusses the managerial issues arising out of the present stock market valuation of “new economy” firms. It links intellectual capital thinking and accounting theory thinking to create an understanding of the differences between intangible and intellectual capital assets as well as adding CAPM thinking to develop a managerial model for managing the future value component of the listed firm. 

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