While the focus on steadily increasing the bottom line over such a long period is to be commended, does the corresponding, relative lack of growth to the top line indicate an over-reliance on making incremental process improvements at the expense of new, somewhat risky investments to spur game-changing innovation? Maybe a more healthy balance of risk vs. reward should be the end goal.
thank you, Mark -- you are right, the risk reward issue is very real; I was somewhat surprised to find the trebling of top CEO compensation since 1990, while employee compensation has stayed flat. Slowly but surely the Salaryman CEO risk-reward incentives are rising. We know its for real if - or when - this leads to intra-company or even intra-industry CEO mobility. So far no signs of this...
Curious about your choice of using EPS to proxy for profits here...? Lots of share buybacks and cancellations in Japan may cause that figure to be inflated (relative to something like YoY growth in OP, or net income). Not sure if this reflects CEO savvy in the cost-cutting sense that this article would suggest. Appreciate your work and always look forward to these articles, thank you!
Do you have any ideas as to why profits are up so much while revenue is flat? I can think of 2 factors, but neither of which would explain an 11X increase.
One, companies have greatly de-levered since the early 90's, so lower interest costs. Also, rates have been very low since the late 90's or so, therefore any debt companies have now has very low cost compared to 1992.
Second, companies have shifted at least part of their workforce to contracters/dispatch staff, so one can imgaine that this would structurally lower payrolls compared to the early 90's.
These items, individually or combined, would not carry net income 11X higher, or anything approaching that. What might be other factors? Thanks for the great article.
While the focus on steadily increasing the bottom line over such a long period is to be commended, does the corresponding, relative lack of growth to the top line indicate an over-reliance on making incremental process improvements at the expense of new, somewhat risky investments to spur game-changing innovation? Maybe a more healthy balance of risk vs. reward should be the end goal.
thank you, Mark -- you are right, the risk reward issue is very real; I was somewhat surprised to find the trebling of top CEO compensation since 1990, while employee compensation has stayed flat. Slowly but surely the Salaryman CEO risk-reward incentives are rising. We know its for real if - or when - this leads to intra-company or even intra-industry CEO mobility. So far no signs of this...
What a clear and eye opening set of statistics and perspective. Thanks!
Curious about your choice of using EPS to proxy for profits here...? Lots of share buybacks and cancellations in Japan may cause that figure to be inflated (relative to something like YoY growth in OP, or net income). Not sure if this reflects CEO savvy in the cost-cutting sense that this article would suggest. Appreciate your work and always look forward to these articles, thank you!
Perhaps due to outsourcing of production to China?
Do you have any ideas as to why profits are up so much while revenue is flat? I can think of 2 factors, but neither of which would explain an 11X increase.
One, companies have greatly de-levered since the early 90's, so lower interest costs. Also, rates have been very low since the late 90's or so, therefore any debt companies have now has very low cost compared to 1992.
Second, companies have shifted at least part of their workforce to contracters/dispatch staff, so one can imgaine that this would structurally lower payrolls compared to the early 90's.
These items, individually or combined, would not carry net income 11X higher, or anything approaching that. What might be other factors? Thanks for the great article.