14, which is actually quite high compared to the S&P 500 at large and so reflects a substantial growth premium currently baked into the stock price. (On a forward P/E basis, HAL is trading at 21.03 times estimated 2010 earnings, versus 15.1 for the S&P 500.)
In contrast, a stock like SLB presents very similar exposure to a prospective oil industry rebound, but is even more richly valued on a growth basis. SLB currently has a trailing P/E of 23.98 -- a slight premium compared to HAL -- and consensus forward earnings growth of roughly 4.31%, which would deliver a PEG ratio of 5.56. Within its sector, HAL is a bargain, but even there, better opportunities exist for the careful investor willing to investigate more obscure small-cap names like WSP Holdings Ltd. (WH) with more immediate growth prospects.
The company's balance sheet appears relatively strong, although its true condition may be masked by the shifting tax treatment of the KBR spinout and other factors. Debt ratio has roughly tripled over the last few years (from 0.124 at YE 2005 to 0.34 at YE 2009) and interest expenses are sharply increasing as a percentage of revenue. While the company's current ratio and large ($2 billion) cash reserves indicate that internal cash flows are more than enough to handle near-term debt obligations, the trend is not encouraging, especially since management has expressed a desire to aggressively fund organic growth in the future.
With enterprise value of about $47 billion (counting the 80% stake in KBR at current market value), the company represents a significant opportunity for a buyer who could put together a reasonable takeover bid and a compelling strategic reason to acquire its ongoing lines of business. However, potential buyers are likely to be few in number, as HAL is already the second-largest player in its industry and the established leader, SLB, has been an active consolidator recently as it is. At its current size, it is unlikely that HAL will ever deliver a M&A premium.
The company has maintained dividend discipline over the recession, with split-adjusted...
Executive Compensation The role of compensation in organizational behavior is an important one as it is used as a key tool by management to achieve social control over its employees (Pfeffer, 1997, p.102), the primary assumption being that compensation packages affect attitudes and behavior. This is seen as particularly true of executive level compensation on the grounds that management must be sufficiently motivated if organizational objectives are to be met and
In order to compare the executive compensation in both countries, the countries firms should be matched and compared according to industry, size and operation. The executive compensation can be measured or compared accurately according to the industry and firms sizes. From the data, it was found that the executive compensation in both countries were high whereas the firm performance was reducing. The data collection for the executive compensation in
Those days are likely over, for a variety of reasons, including shareholder concerns about the ever increasing dilution due to the issuance of options and new accounting rules requiring companies to expense options... In addition, studies have shown that the accounting cost of stock options exceeds employees' perceived value of those options. Finally, there has been a crisis in governance that has caused a reexamination of corporate accounting standards.
This talent does need to be retained. With respect to the executives who were involved in mortgage-backed securities, however, this argument holds little water. These are not talented individuals, as demonstrated by the substantial losses their actions have inflicted upon the company. They are not the sort of employees that the firm should be seeking to retain. It is only due to the outdated or erroneous perception that these individuals
Part of the reason for this, is because shareholders and the board of directors are allowing this to occur. To prevent the situation from becoming worse, shareholders and the board need to be more independent, by questioning the motives / actions of management. At the same time, there must be some kind regulations in place that can prevent the runaway abuses from occurring. If this kind of strategy can
Executive Compensation Programs and Incentives In 1996 the average salary plus bonus for CEOs was $2.3 million. After other benefits were added, this sum rose to $5,781,300. Beginning with Revlon executive Michael Bergerac who broke the $1 million mark in 1974, executive pay and bonus plans have soared to mind-boggling proportions. Although various governmental agencies have set limits on tax-deductible executive compensation, these efforts not only failed but served to raise
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