thanks for this writeup. My review of the Proxy was aligned with the same thoughts.
A couple of additional queries/thoughts:
-Based on what we have seen at investor day - what do you think would be reasonable 100% targets for FY2025. Is it 100% payout aligned with guidance and 200% double the growth guidance.
-I found it weird that the charts (eg. pg 76&78) they are showing was for NET income but the metric they are targeting is Operating Income
-It would be nice to see up front the targets they are shooting for in advance - ie. now see the targets they have for this FY.
Thank you for your comments, we're glad you enjoyed the article! Now, to address your questions:
1. In our view, they can’t set less than 5% TM$ growth as the threshold for 100% target achievement (excluding interest). For 200% achievement, we’d like anything in the 7.5%–10% growth range acceptable, since even hitting 150% of target (5% × 1.5 = 7.5%) would be a success, especially under current market conditions.
2. Regarding the net income point, we’re not sure why it's presented that way either.
3. As for the target disclosure, they do share the performance targets, but not what’s embedded in the pay structure in advance. Perhaps they choose to keep that confidential for their own reasons, which we’re fine with. What matters is that the structure is designed to drive performance, not simply to reward.
Loved this, it’s an aspect of analysis not discussed enough and proxies are complicated to read through. I appreciate your thoughts on the structure and agree it’s not great.
Thank you for calling this out! It’s important for investors to be more aware of how leadership is compensated — and what that says about company aspirations
thanks for this writeup. My review of the Proxy was aligned with the same thoughts.
A couple of additional queries/thoughts:
-Based on what we have seen at investor day - what do you think would be reasonable 100% targets for FY2025. Is it 100% payout aligned with guidance and 200% double the growth guidance.
-I found it weird that the charts (eg. pg 76&78) they are showing was for NET income but the metric they are targeting is Operating Income
-It would be nice to see up front the targets they are shooting for in advance - ie. now see the targets they have for this FY.
Anyway - thanks so much for your insights.
Hi Matthew,
Thank you for your comments, we're glad you enjoyed the article! Now, to address your questions:
1. In our view, they can’t set less than 5% TM$ growth as the threshold for 100% target achievement (excluding interest). For 200% achievement, we’d like anything in the 7.5%–10% growth range acceptable, since even hitting 150% of target (5% × 1.5 = 7.5%) would be a success, especially under current market conditions.
2. Regarding the net income point, we’re not sure why it's presented that way either.
3. As for the target disclosure, they do share the performance targets, but not what’s embedded in the pay structure in advance. Perhaps they choose to keep that confidential for their own reasons, which we’re fine with. What matters is that the structure is designed to drive performance, not simply to reward.
Loved this, it’s an aspect of analysis not discussed enough and proxies are complicated to read through. I appreciate your thoughts on the structure and agree it’s not great.
Glad you enjoyed it Dave. It’s often overlooked, but you can sometimes find really important information in there.
Thank you for calling this out! It’s important for investors to be more aware of how leadership is compensated — and what that says about company aspirations
You are welcome sir. As Charlie Munger said, "Show me the incentive and I'll show you the outcome."