Establishing Objectives
As you know, the company’s board of directors has charged you and your co-managers with achieving five
performance objectives:
1. Growing earnings per share at least 7% annually through Year 15 and at least 5% annually thereafter.
2. Maintaining a return on average equity investment (ROE) of 15% or more annually.
3. Maintaining a B+ or higher credit rating.
4. Achieving and maintaining an “image rating” of 70 or higher.
5. Achieving stock price gains averaging about 7% annually through Year 15 and about 5% annually thereafter.
In the space provided on the 3-year strategic plan, indicate what your performance targets are for each of the upcoming
three years. As a rule, the targets established by the board should be the minimum performance levels that you intend
to achieve during each year of the plan period (the targeted values for EPS and stock price that the Board and investors
expect each year are shown on each year of the Footwear Industry Report). The only time that it is justifiable to develop
a 3-year plan where the objectives you set are below the annual targets established by the Board and expected by
investors is when your company is in dire straits and you do not think it is reasonable or realistic to get things turned
around such that the expected performance levels can be achieved.
However, company co-managers should really set stretch objectives higher than the minimums expected by the board
and by investors—especially if achieving higher-than-expected performance levels will be necessary to keep the
company in the ranks of the industry leaders and in contention for industry leadership. Moreover,