In today’s briefing:
- Will the Incorporation of TSR into the Remuneration System Affect Cash Allocation?
Will the Incorporation of TSR into the Remuneration System Affect Cash Allocation?
- With nearly half of companies listed on TSE having a P/B ratio of less than 1, many investors are likely to question the appropriateness of executives receiving fixed remuneration.
- Incorporating TSR into the compensation system will likely motivate companies to increase shareholder returns, which is a good thing if it leads to the return of unused cash to shareholders.
- As long as fixed compensation remains high, there won’t be much incentive to put a lot of cash into growth investments that boost corporate value.
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