Daily Brief ESG: ZEE Entertainment- Paying the Price and more

In today’s briefing:

ZEE Entertainment- Paying the Price
Fewer Companies Still Use Capital Efficiency Such as ROE as KPIs for Variable Compensation
ESG Report: Hanmi Pharmaceutical Co. (128940 KS) And Hanmi Science (008930 KS)

ZEE Entertainment- Paying the Price

Zee Entertainment Enterprises (Z IN) ‘s tussle with the regulators and legalities seem to be perpetual in nature.
SEBI’s interim order highlights the abuse of promoters’ position in the company in order to siphon-off funds, ultimately benefiting the promoter family. SEBI has directed promoters to resign as directors.
Since the irregularities are now being made public, eyes now would be on the proposed Zee-Sony merger, which could further be delayed.

Overseas investors have called for increasing the ratio of variable compensation to executive compensation. Given that foreign ownership ratios have remained high, this upward trend is expected to continue.
Few companies use capital efficiency like ROE as KPIs for variable compensation, which is consistent with the fact that few companies set them as numerical targets in mid-term management plans.
The role of independent directors has become more important as more companies are involving compensation committees in the compensation determination process since the 2001 amendments to the Companies Law.

Hanmi Pharmaceutical and Hanmi Science have demonstrated consistent financial performance through aggressive R&D investments, with significant achievements based on internally developed products in 2022.
The new leadership structure of the company has the potential to improve corporate governance transparency, but there is a need for further shareholder-friendly changes, such as expanding dividend policies.
Overall, the company’s current status, valuation, and ESG performance trends indicate positive prospects, including transparent management practices, sustained investment in R&D, and plans to enhance dividend policies.

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