MeadWestvaco

Implementation Program: 2008-2009

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Background:

  • Despite significant portfolio restructuring and repeated cost-reduction initiatives, MeadWestvaco (MWV) was still delivering below-average shareholder returns. It was then that Chairman and CEO John Luke decided to adopt a more disciplined approach to managing shareholder value

Actions:

  • In 2008, MWV conducted a company-wide assessment of where and why economic profits were being created and consumed across the corporation and the markets they served
  • Armed with this financial and strategic assessment, the MWV leadership team was able to define and quantify a clear and concise corporate value-improvement agenda
  • Over the next 18 months, management implemented a number of portfolio and business model changes while also institutionalizing a number of management disciplines to better align incentives and decisions with shareholder interests – e.g., shifting investment to economically profitable businesses and business segments (like Brazil packaging), restructuring the production footprint of the company, focusing on profitable, multi-product customer relationships

Results:

  • Between 2008 and 2010, MWV delivered significant improvements in overall economic profit growth. While the competition delivered a 31 percent return to shareholders over that time period, MWV delivered a 60 percent increase in shareholder value, double that of its peers