IDIOT'S GUIDE TO FED2
COMPANY MANAGEMENT FOR MANUFACTURERS
DEALING WITH DISAFFECTION
Shareholders are a stroppy bunch and if they don't think you're running the company properly they will become dissatisfied and may even stage a rebellion. The disaffection level is shown on the company display. There are several things that affect it. The change in share price is one: increased share values tends to reduce disaffection, while falling share values do the opposite. Issuing a dividend could also have a positive effect, and the larger the dividend, the more likely it is that disaffection will go down. Failure to issue a dividend during an accounts cycle is really going to annoy your shareholders. During a cycle, the dividend figure on the company display is cumulative, but it is set to zero at the start of each cycle, so it's better to issue one divvy each cycle, rather than three divvies in one cycle and none in the next two.
However, share prices and dividends only have a relatively small effect on disaffection, and the major effect is the result of the accounts for the previous cycle. Shareholders are keen readers of balance sheets, and they will study the company's accounts at the end of each cycle. If they don't like what they see, they will get more disaffected. They don't just look at the profit figure, they look at how that profit relates to such things as the share price, and the dividends paid out. There's a bit of jargon to be learnt here:
- Earnings - this is the earnings per share, which is calculated by dividing the company's profit for the cycle by the number of shares. A company always has 10,000 shares, no matter how they are distributed between the broker, the treasury and you, so if the profit figure is 40,000 ig, then the earnings are 4 ig per share.
- P/E ratio - this is the ratio between the share price and the earnings. If the share price is 1,000 ig, and the earnings 4 ig, the P/E ratio is 250. The higher this figure, the worse the company is doing.
- E/D ratio - this is the ratio between the earnings per share and the dividend. If the earnings are 4 ig per share, and you paid a dividend of 2 ig, then the E/D ratio is 2. The lower this figure is, the happier the shareholders will be.
- P/D ratio - this is the ratio between the share price and the dividend paid out during the cycle, and it's the one that shareholders really care about. If the share price is 1,000 ig, and you paid a dividend of 2 ig, then the P/D ratio is 500. The lower this figure is, the happier the shareholders will be.
The first three of these measures indicate the overall economic health of your company. They will be studied by players who are at the Financier level to decide whether to invest in your company. The fourth measure, P/D ratio, has the largest effect on shareholder disaffection.
Disaffection is a percentage, which represents that proportion of the external shareholders that are unhappy with your performance. The key figure is 50%. If the disaffection level is greater than 50, then you are in danger of suffering a shareholders revolt, and the higher the disaffection, the more likely the revolt will happen. However, it takes shareholders time to organize a revolt, so you do have time to do something about disaffection, even if it goes over 50%. The fastest way to calm your disaffected shareholders down is to issue a dividend. You can also buy some of the shares from the brokers, to reduce the power of the independent shareholders.
Every day at reset, the game checks the disaffection level to see whether the shareholders are disgruntled enough to stage a rebellion. The only day a rebellion will not happen is the day the cycle's accounts are made up - that gives you a day's grace to try to get the disaffection below 50%.
If the shareholders do rebel, it's pretty drastic! They take control of the company's assets and sell all the depots, and all but one of the factories. All of the company's money, including the proceeds from the sell-off, is used to pay out an extraordinary dividend, leaving just one meg in the company. The share price drops by half, and the disaffection level is set back to zero.
You are then left in control of a much reduced company and can try again.
If you are going to be absent from Fed DataSpace it's a good idea to freeze the company for the duration, to stop the shareholders from rampaging in fury every cycle. It works just like it did for your business, but now the command is 'FREEZE COMPANY'.
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