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Nov 19·edited Nov 19

so after the investor day, when they edged down the EPS growth targets (still mid-teens), do you think the PSU grants reflect anything or just management enrichment? since investor day the company has issued $750M debt. leaves a lot for buybacks or acquisition.

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That’s a good question. Given the performance targets in the PSU aren’t disclosed, it’s difficult to know whether the compensation committee used the lower EPS hurdle in the most recent investor day (~1 month after the grants) or if they used the ones they previously had in hand. For something trading at somewhere close to 10x earnings, I don’t think that matters a ton.

Where I would be scared is if management went out and did a huge acquisition that would easily boost EPS past the targets in the grant and allow them to cash in. The comp committee can technically move the goal posts in that scenario, but there’s a chance that they might not. If the comp committee was crazy enough to give such large grants in the first place, then they might be crazy enough not to change the hurdles during a large acquisition. I have a feeling the CEO has quite a bit of power over the board, so it’s definitely possible.

Hard to know if they’re lining their pockets or not at this point.

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