14 The Financial Times Guide to Corporate Valuation
Creating an incentive programme to keep and
attract employees
When Mobitronics had been in operation for approximately four years
the company had 150 employees. A frequent problem was keeping the
most competent personnel and attracting new talent. One alternative was
to increase salaries significantly, but as pay was already one of the main
costs, incentives that did not increase fixed costs or further strained the
company’s liquidity were preferred.
Mobitronics’ management decided to construct an incentive programme
with shareholder-like effects for the employees. The benefit of such a pro-
gramme is its limited effect on company cash flow and the alignment of
shareholder and employee