ORIX Corporation (TSE:8591; NYSE:IX), a diversified financial services group, has announced the disposal of its own shares as restricted stock, which is scheduled to take place on December 2, 2024. The Tokyo-based company will dispose of 141,700 shares of common stock at a price of 3,363 yen per share, totaling approximately 476.5 million yen.
The recipients of this restricted stock are employees of ORIX and its subsidiaries, with 235 company employees receiving 106,600 shares and 81 employees of company subsidiaries receiving 35,100 shares. This move is part of an incentive plan targeting manager- and executive-level employees to promote medium- to long-term corporate value enhancement.
Under the plan, eligible employees will receive shares in exchange for monetary claims, with the price per share based on the closing price of ORIX's common stock on the Tokyo Stock Exchange prior to the determination date. The shares will be subject to a transfer restriction period from December 2, 2024, to November 30, 2027, during which the employees cannot sell or otherwise dispose of the shares.
The conditions for lifting these restrictions include continuous service in eligible positions or justifiable departure from the company. In certain circumstances, such as unauthorized departure from eligible positions, ORIX retains the right to reacquire the shares without compensation. Additionally, provisions are in place for lifting restrictions in the event of organizational restructuring.
Shares will be managed in dedicated accounts at Nomura Securities Co., Ltd. to ensure compliance with the transfer restrictions. This disposal is being carried out through in-kind contributions, with the disposal price set to match the market price of the company's stock immediately prior to the decision by the company's representative executive officer.
In other recent news, ORIX Corporation has reported a substantial 38% increase in net income for the first quarter, reaching JPY86.7 billion, primarily driven by steady earnings in the finance sector and substantial profit increases in the inbound tourism segment. The company's annualized return on equity also rose to 8.7%. However, ORIX USA noted a decline in profits due to cautious risk management, while profits in the Asia and Australia segment dropped due to the absence of valuation gains.
In terms of strategic focus, ORIX is eyeing sectors with growth potential, such as inbound tourism and aircraft leasing, and has made an equity investment in Panasonic (OTC:PCRFY) Connect's projector business. BofA Securities, after resuming coverage on ORIX Corp, issued a Neutral rating, citing challenges in forecasting earnings due to significant volatility in profits, particularly from the private equity investment segment.
The Tokyo-based company also disclosed the status of its ongoing share repurchase program, revealing that it has cumulatively repurchased 7,613,200 shares at a total cost of 26.38 billion yen since the Board's resolution. This repurchase activity is part of a broader buyback plan aimed at enhancing shareholder value.
InvestingPro Insights
ORIX Corporation's decision to implement a restricted stock program aligns with its strong financial position and commitment to long-term value creation. According to InvestingPro data, ORIX boasts a market capitalization of $26.63 billion and has demonstrated profitability over the last twelve months. The company's P/E ratio of 10.44 suggests it may be undervalued relative to its earnings, which could make the restricted stock even more appealing to employees.
InvestingPro Tips highlight ORIX's status as a prominent player in the Financial Services industry, with a track record of maintaining dividend payments for 33 consecutive years. This consistency in shareholder returns complements the new employee incentive program, potentially enhancing overall stakeholder value. The company's strong return over the last five years further underscores its financial stability and growth potential.
For investors seeking a deeper understanding of ORIX's financial health and prospects, InvestingPro offers 6 additional tips, providing a comprehensive analysis of the company's position in the market.
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