Friday, August 25, 2006

Calls of Note Part 4

- Roth Capital notes that yesterday, Hyperion (NASDAQ:HYSL) filed a noteworthy 8-K disclosing that its Board established variable compensation for executive officers based on license- revenue performance targets. Certain members of senior management, including all of its named executive officers, will receive cash awards of ranging from $230k-$990k and fully-vested restricted stock awards ranging from 3,500-15,000 shares of Hyperion common stock on June 30, 2008 "provided the Company achieves certain license revenue objectives."

Firm notes that although they would have preferred that the Board combine these license- revenue objectives with specific operating-margin targets, they are struck by the very explicit Board directive that the executive team supercharge the company's heretofore lackluster license-revenue growth. Apparently the Board wants the entire management team focused on license-revenue growth. The last noteworthy performance target was set by the Board in 2002 and targeted a 12% operating margin and a $35/share stock; at the time, these
seemed like barely attainable "reach" goals, but that the team was surprisingly quick to achieve them. Yep, compensation matters!

They maintain Buy rating and price target of $38, reflecting a P/E of 20x FY2008E and 13x FCF, which is slightly above the peer group.

Notablecalls: Not actionable but interesting to know category. For you investors out there.

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