Cockpit
Statements
Value Based Incentives Improve Enterprise Value
Professors Kleimann et. al. from Oakland University in California have shown that value based compensation systems provide superior returns to the companies using them. 71 companies with value based compensation systems have been compared to peers without such systems.
Companies with value based leadership systems had an outperformance of 4.4% before introducing value based incentives. After introduction, this outperformance increased to 28.8%. Thus, it is better companies that are more likely to introduce value based management, and when they do, they increase their returns even further.
Because the principles of value based management are in line with those of beyond budgeting, this study can also be used to make a case for beyond budgeting.
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