The New Standards: Methods for Linking Business Performance and Executive Incentive Pay -- Contents -- Preface -- Acknowledgments -- Chapter 1: To the CEO -- Well-Designed Incentives Are Governance Defined -- Old School -- Act Now -- You Do Not Run Your Company -- The New Standards -- It Is Not about You -- Last Things First -- Bottom Lines -- Chapter 2: Business Valuation and Incentive Policy -- The Rosetta Stone -- Stealing the Playbook of Business Valuation -- Incentives and Value Creation -- Value Is a Function of the Quality and Quantity of Earnings -- Cost of Capital and Expected Returns -- As Long as We're at It -- What Are We Paying For? -- Total Business Return -- The DCF Model Serves as a Proxy for Other Valuation Methods -- Free Cash Flow -- FCF and the Irrelevance of Accounting Choices -- Income and Capital: FCF's Drivers Should Be the Main Incentive Drivers -- The Shape of Things to Come -- Quando, Quando, Quando -- The Past Is Relevant Only as Prologue -- Valuation Perspective: Operational Results, Debt, and Capital Structure -- Chapter 3: Market Practices in Incentive Pay -- How Much Are We Paying for Management Incentives? -- Variable Pay versus Incentive Pay -- Mismatch Makers -- Other Market-Based Considerations of Market-Based Consideration -- Market Practices and Presumptions -- Chapter 4: The New Standards -- Common Sense -- Bias Is the Boll Weevil of Value Creation -- Get Cynical -- Incentivization and Its Discontents -- Leading Charcter -- Guidelines for Incentive Design -- Chapter 5: Risk and Executive Incentive Pay -- Risk Management Policy and Incentives -- Sheep in Wolves' Clothing -- Investors versus Management -- The Risk Trade -- Risk and Incentive Calibration -- The Wages of Risk: Estimating the Cost of Capital -- Beta Coefficients and the Capital Asset Pricing Model -- Financial Leverage and the Cost of Capital.

Other Methods and Evidence for Attaching a Cost to Capital -- Chapter 6: Motive, Means, and Method: Evaluating Incentive Performance Metrics -- Role of Individual Performance in Incentive Pay -- Nonfinancial Goals -- Evaluating Financial Metrics -- Revenue, Volume, and Gross Margin -- Using Valuation Criteria to Choose Metrics -- Context for Evaluating Financial Metrics -- Operating Income, EBIT, and Return on Invested Capital -- Two Wrongs Can Make a Right -- On the Importance of Being Earnest -- Pretax Income, Net Income, EPS, and ROE -- Debt, Share Repurchases, EPS, and Stock Price Gains -- Remedying Issues with Pretax Income, Net Income, EPS, and ROE -- Cash Flow Metrics -- Indexation and Immunity -- Overall Perspectives -- Chapter 7: Value-Based Performance Measures -- Value-Based Measurement -- Economic Profit or Economic Value Added -- Use the Metric, Lose the Rest -- Total Business Return -- Shareholder Value Added -- Cash Value Added -- Cash Flow Return on Investment -- Real Value Added -- Common Values -- Metric Adjustments and Business Governance -- Metric Adjustments: Compulsories Only -- Risk-Based Capital Requirements and Return on Economic Capital -- How Not to Choose Among Value-Based Metrics -- Scope and Purpose for Value-Based Metrics -- Chapter 8: Ownership, Not Gamesmanship: Setting Targets and Ranges for Performance-Based Plans -- Best of Both Worlds -- Trifold Guide to Benchmarks -- The Past Is Prologue -- Not to Insult Chimpanzees -- Interpreting the Oracle -- Multiple Personalities -- Full Reconciliation to Market Value -- Setting Targets Based on Total Business Return -- Run Away! -- Range and Domain: Setting Intervals for Performance and Pay -- Weightings, Award Leverage, and Participant Influence -- Incentive Risks, Calibration, and Testing.

Chapter 9: Business Units and Private Companies, Phantom Stock and Performance Plans -- Private Companies -- Phantom Stock and Subsidiary Equity -- Phantom Stock Plan Example Using Total Business Return -- TBR Phantom Stock Grant Structure and Leverage -- Dilution Guidelines and Competitive Award Levels -- Valuation Approaches for the Phantom Stock Plan -- Market Valuation Techniques -- Market Comparison Approach -- Discounted Cash Flow Valuation -- Discounts for Lack of Marketability and Control -- Valuation Accuracy versus Incentive Efficacy -- Reconciling and Funding Market Value and Formula Value -- Market-Indexed and Performance-Based Valuation Formulas -- EBITDA as a Valuation Yardstick -- Equity-Based Incentive Plans Based on Book Value -- Tale of Three Cities -- Adjusting Valuation Results -- Performance Plans -- Value-Based Incentives versus Private Equity Incentives -- Where the Rubber Hits the Road -- Chapter 10: Using Stock to Create Effective Incentives -- From the Top -- Off to the Races -- Pros and Cons of Major Approaches to Stock-Based Incentive Design -- All-In-One -- Let Them Eat Risk -- Purely Stock-Based LTI Approaches -- Keeping the Horses in the Barn -- Granting and Leverage -- Equity-Based Incentives in Venture-Stage Companies -- Ownership Effects -- A Whole New Ball Game -- Chapter 11: The Medium Is the Message -- Incentives and Financial Governance -- Budgeting -- Long-Range Planning -- Investment Evaluation -- Financial Education -- Cost Control -- Financial Performance Evaluation -- Financing Decisions -- Risk Management -- Human Resource Perspectives -- Glossary -- Index -- End User License Agreement.