The future of Atos SE: voting choices and what it means for investors

As current investors in Atos SE, you should have received an email detailing your rights to vote on significant resolutions concerning the future of the company although if you didn’t receive any documents you can consult it on the Bulletin des Annonces Legales Obligatoires. Below, we want to provide a clear summary of the key points, their potential impacts, and considerations for investors, and what is better, in English!

1. Financial Performance and Dividends

Approval of Financial Statements

• Details: Financial statements for the year ending December 31, 2023, which show significant losses as most of us, we already know.
• Impact: Although is widely known, losses may negatively affect investor sentiment, raising concerns about the company’s financial health and future growth, this is a risky stock at the moment and their future is quite uncertain.

No Dividend Distribution

• Details: Confirmation that due to losses, no dividends will be distributed for 2023 financial year.
• Impact: Income-focused investors relying on dividends may sell off shares, potentially depressing the stock price. In our opinion, those investors have probably sold well before this as the stock price was already plummeting almost 100%.

2. Board Composition

Ratification and Appointment of Board Members

• New Members: Françoise Mercadal-Delasalles, Jean-Jacques Morin, Sujatha Chandrasekaran, Monika Maurer, Alain Crozier, and Philippe Salle.
• New Appointments: Joanna Dziubak and Hildegard Müller.
• Impact: Fresh perspectives and expertise could improve strategic decisions and governance, boosting investor confidence. Investors are feeling quite confident specially with Philippe Salle with proven track of success.

3. Sustainability Reporting

Appointment of Forvis Mazars

• Details: Forvis Mazars appointed to certify sustainability information.
• Impact: Reflects a commitment to ESG (Environmental, Social, and Governance) transparency, potentially attracting ESG-focused investors and enhancing the company’s reputation.

4. Executive Compensation

Approval of Executive Remuneration Policies

• Key Executives: Bertrand Meunier, Jean-Pierre Mustier, Nourdine Bihmane, Philippe Oliva, and Yves Bernaert.
• Impact: Ensures alignment of executive compensation with performance, however, looking at the numbers, seems quite unfair to deserve a compensation looking at the state of the company.

5. Share Buyback Program and Capital Increases

Share Buyback Program

• Details: Here is when it is interesting for us as investors, depending on the voting results, Atos SE would be authorised to buy back up to 10% of its shares, with a maximum purchase price of €50 per share and a total budget capped at €895 million. Buybacks can be executed through open market transactions, block trades, or derivative instruments, offering flexibility.
• Positive Impacts:
  • Support for Stock Price: Reducing the number of shares outstanding increases earnings per share (EPS), which can boost stock prices, particularly if shares are undervalued.
  • Return of Capital: This is just another method for rewarding shareholders, especially those seeking alternatives to dividends.
  • Signal of Confidence: Highlights management’s optimism about the company’s future, potentially attracting more investors.
• Potential Risks: It would be interested how this buyback would be funded , if it is done through debt, buybacks could increase financial leverage, heightening the company’s risk profile even more.
• Additional Details: The program also allows for share use in employee incentives, acquisitions, or cancellation to reduce capital.

Capital Increases

• Details: The board is authorised to issue new shares or securities up to 40% of the company’s capital, with the option to maintain or suppress shareholder preferential subscription rights.
• Impacts:
  • Dilution of Existing Shares: Issuing new shares can dilute existing shareholders’ ownership and potentially reduce stock value in the short term, we have just seen what happened to stock recently with the massive issue of billions of shares to creditors.
  • Funding for Growth: Although it could be also good as it provides essential funding for acquisitions, R&D, or debt reduction, driving long-term growth.
  • Market Perception: It could have great positive reactions if funds are seen as strategically beneficial for the company, but also could be a disaster if it is viewed as a sign of financial distress.
  • Flexibility and Strategic Moves: To have a little extra of cash on their balance enables responsiveness to market opportunities, crucial in the evolving IT services industry.

6. Employee Stock Plans

Issuance of Shares for Employee Stock Plans

• Details: Proposal for the issuance of shares for employees aligns employee interests with shareholders, sort of a bonus to keep them motivated in bringing back this massive boat.
• Impact:
  • Positive: Could improve performance and commitment.
  • Negative: May result in short-term share dilution if there are even more shares.

7. Market Perception and Overall Impact

The overall market reaction to these resolutions depends on their communication and execution. Transparent communication and clear demonstrations of strategic benefits will be crucial in maintaining or enhancing investor confidence.

• Short-Term Challenges: Absence of dividends and potential share dilution could weigh on stock price.
• Long-Term Potential: Initiatives such as share buybacks, ESG commitments, and governance improvements may drive sustained growth and shareholder value.

Conclusion

The share buyback program and potential capital increases announced by Atos SE present a mix of opportunities and risks for investors. While we see the buyback program as a good option that can support the stock price and signal confidence, their proposal for capital increases could lead to dilution. It will depend on how they are planning to use that as could also fund growth.

What is sure is that these measures reflect Atos SE’s proactive approach to enhancing shareholder value and positioning itself for future success. We have also made a review on Atos SE stock if you want more information.

Every investor has their own opinion and goals with their money so the choice is only yours on this voting! At the end, we all want the best value for our money.