Beware of bad incentives

Management remuneration and incentives are a critical but often overlooked part of company analysis. While good managers can produce incredible sums of money over long periods, such as Warren Buffett at Berkshire Hathaway or Brian McNamee at CSL, managers guided by poorly constructed incentive structures can destroy businesses and your investment. The market was caught off guard recently when Newcrest Mining announced a $5.6bn write off. But the writing was on the wall for anyone that read page 40 of Newcrest’s 2009 annual report. Source: Newcrest Mining 2009 Annual Report The remuneration report shows that management would get rewarded for...

Management remuneration and incentives are a critical but often overlooked part of company analysis. While good managers can produce incredible sums of money over long periods, such as Warren Buffett at Berkshire Hathaway or Brian McNamee at CSL, managers guided by poorly constructed incentive structures can destroy businesses and your investment.

The market was caught off guard recently when Newcrest Mining announced a $5.6bn write off. But the writing was on the wall for anyone that read page 40 of Newcrest’s 2009 annual report.

NCM LTI excerpt Source: Newcrest Mining 2009 Annual Report

{{content.question}}

Mastercard

{{ twilioFailed ? 'SMS Code Failed to Send…' : 'An SMS verification code has been sent ...' }}

Hi {{ user.FirstName }}

Looks like you have already taken a free trial

Please enter your payment details

We have sent you a code via SMS to {{user.DayPhone}}

please enter this code below to complete your SMS verification

We cannot send you a code via SMS to {{user.DayPhone}}

If you didn't receive SMS code please

SMS code cannot be sent due to: {{ twilioStatus }}

Please select one of the options below:

Looks you are already a member. Please enter your password to proceed

Please untick this box when using a public or shared device


Verify your mobile number to proceed…

Please check your mobile number below and press the Send Verification Code button. This will be used to complete your verification in the next step.

Please sign up for full access

Mastercard

Updating information

Please wait ...

Trial

Mastercard
{{ productPrice }} / day
( GST included )
Price $0
GST $0
Discount -{{productDiscount}}
TOTAL {{productPrice}}
  • Mastercard
  • Visa

Please click on the ACTIVATE button to finalise your membership

Mastercard

The email address you entered is registered with InvestSMART.

Please login or select "Don't know password"

Please untick this box when using a public or shared device


Register as a new member

(using a different email)

Related Articles