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Valuation Measuring and managing the value ofpanies - Koller T.

Koller T., Murrin J. Valuation Measuring and managing the value ofpanies - Wiley & sons , 2000. - 508 p.
ISBN 0-471-36190-9
Download (direct link): valuationmeasuringandmanaging2000.pdf
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Page 41
important element of EG's strategy and management approaches. Ralph would need a strong executive who would be able to help him push this through.
EG financial officers had been focused on running the treasury operation, producing financial reports, and negotiating the occasional deal. Ralph needed much more, and since his current CFO was due to retire at the end of the year, he felt this was a perfect opportunity to redefine the role. Ralph's concept was to create a position that would blend corporate strategy and finance responsibilities. The officer would act as a bridge between the strategic/operating focus of the division heads and the financial requirements of the corporation and its investors. Ralph drafted a job description for this position, which in EG's case would carry the title of executive vice president (EVP) for corporate strategy and finance (Exhibit 2.16). The EVP would act as a kind of ''super CFO" and take the lead in developing a value-creating corporate strategy for EG, as well as to work with Ralph and the division heads to build a value-management capability throughout the organization.
Exhibit 2.16 Job Description: Executive Vice President for Corporate Strategy and Finance, EG Corporation Job Concept
The EVP will act as key advisor to the CEO and division heads on major strategic and operational issues and will manage EG's financial and planning functions. Responsibilities will include:
• Corporate strategy.
• Financial strategy.
• Budgeting and management control.
• Financial management.
Corporate strategy The EVP will take the lead role in coordinating the development of a value-maximizing overall corporate strategy for EG:
• Ensuring that plans are in place to create maximum value for EG from its current businesses.
—Assessing the value creation potential of plans on an ongoing basis.
—Ensuring that plans focus on key issues by challenging important assumptions and the rationale for changes in performance, and providing external reference points for value-creation opportunities (for example, value of the businesses to alternative owners).
—Acting as a sounding board for the CEO and division heads on critical proposals. —Establishing financial measurement standards and developing systems to monitor performance against goals.
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Exhibit 2.16 Continued
• Supporting the development of corporate expansion strategies to create additional shareholder value.
—Developing perspectives on market opportunities in businesses closely related to current businesses.
—Assessing EG's skills and assets in place for pursuing opportunities and suggesting programs to build skills to fill gaps.
—Conducting business and financial evaluations of specific proposals.
• Planning and executing major transactions required to carry out EG's strategies.
Financial strategy The EVP will have responsibility for developing, recommending, and executing an overall financial strategy for EG that supports its business strategies and captures maximum value for its shareholders:
• Developing value-creating capital structure and dividend policy recommendations.
• Designing and managing a strategy for communicating the key elements of EG's plans and performance to investors and the financial community.
• Negotiating and executing all major financial transactions, including borrowing, share issuance, and share repurchases.
Budgeting and management control The EVP will design and carry out processes to ensure that EG managers have the right information to set goals, make decisions, and monitor performance:
• Coordinating preparation of short-term operating budgets.
• Developing key performance measures for each business unit.
• Ensuring that business units have adequate management controls in place.
• Evaluating business-unit performance in conjunction with the CEO and division heads.
Financial management The EVP will ensure the effective and efficient management of EG's financial operations:
• Ensuring that all external reporting and compliance obligations are fulfilled.
• Establishing controls to safeguard EG's assets.
• Ensuring the integrity and efficiency of cash, receivables, and payables management.
• Filing and paying all tax obligations.
• Pursuing opportunities to reduce EG's tax burden.
• Maintaining strong day-to-day relationships with EG's banks.
• Managing EG's pension fund.
• Managing EG's risk management programs.
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Exhibit 2.16 Continued Success Criteria
If the EVP is successful:
One year from now:
• A well-defined corporate strategy will have been created, and early phases of execution will have been completed.
• A clearly articulated financial strategy will have been developed and implementation will have begun.
• Division heads and key managers will think in terms of shareholder value creation when developing their plans and evaluating proposals.
• The financial management functions will be operating smoothly.
• Securities analysts wll understand EG's strategy and evaluate it as a strong operating company rather than a breakup candidate.
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