In today’s briefing:
- Fewer Companies Still Use Capital Efficiency Such as ROE as KPIs for Variable Compensation
- M3: Growth Slowing Down Despite Long List of M&As Continuing
Fewer Companies Still Use Capital Efficiency Such as ROE as KPIs for Variable Compensation
- 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.
M3: Growth Slowing Down Despite Long List of M&As Continuing
- M3’s share price dropped around 9% after 4QFY03/2023 earnings, however, it went up by more than 8% since then following the announcement regarding the acquisition of Kantar’s healthcare research businesses.
- Our estimates suggest that new acquisition would not contribute to any meaningful growth in the near term. Despite having large no. of M&A deals, growth rates have started to fall.
- We think there is further downside to M3 Inc (2413 JP) ‘s consensus FY+2 earnings estimates and we would recommend shorting the stock.
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