FOCUS | XXX

Company Update | XX XXXXX 2013

FOCUS | Indofood Sukses Makmur
Company Update | 24 March 2014

Mandiri Sekuritas Analyst Saved by the Green

We reiterate our Buy rating on INDF with higher TP of Rp 8,200/share with 12% upside
Herman Koeswanto, CFA potential. INDF enjoyed stronger earnings growth in 4Q13 as compared to that of ICBP
+6221 5296 9547 thanks to strong recovery of agribusiness and lucrative earnings from China Minzhong
[email protected] acquisition. INDF still maintains its dividend payout ratio at 40-50%. We believe INDF’s
discounted valuation to ICBP will narrow as agribusiness valuation is rerating further.
SECTOR: CONSUMER FY13 results within expectation. INDF 19.6%, mostly thanks to strong CPO ASP of
reported FY13 NPAT of Rp2.5tn (-23%YoY), Rp8,399/kg (+35%YoY, +14%QoQ) followed by
within our expectation which mainly due to strong CPO sales volume of 235k tons
forex loss of Rp1.7tn that mostly attributable to (+12%YoY, +21%QoQ). In addition, rising trend
BUY China Minzhong acquisition. Adjusted for the of sugar prices would also benefit INDF’s sugar
forex loss, FY13 core NPAT Rp3.3tn (+3%YoY) plantation ventures in Brazil and Philippines.
Current Price Rp7,325 considerably in-line with consensus. FY13 EBIT
Price Target Rp8,200 (+12%) of Rp6.1tn (-10%YoY) was slightly below our China Minzhong: On track!. China Minzhong
Prev TP:Rp7,500 expectation due to margin compression in ICBP posted strong 2Q FY14 NPAT of RMB201mn
52-Week range 5,750 - 7,800 and Bogasari during 4Q13. Overall INDF (-6%YoY, +317%QoQ), within our expectation.
enjoyed strong earnings growth momentum in Strong 2Q FY14 results were driven by rising
4Q13 with NPAT of Rp582bn (+166%QoQ) contribution of brined products in processed
Stock Data thanks to agribusiness and China Minzhong. vegetable and improving yield from farmland.
China Minzhong is proven value accretive
Bloomberg Code INDF IJ Bogasari: gaining market share. Bogasari acquisition to INDF. It contributed 9% FY13 EBIT
Mkt.Cap (Rpbn/US$mn) 64,313.5 / 5,630.1 recorded 4Q13 EBIT of Rp176bn (-42%YoY, with 3% of FY13 sales contribution. INDF has
Issued Shares (Mn) 8,780.0 -57%QoQ), weaker than expected mainly due allocated Rp1.9tn capex budget for the
Avg. Daily T/O (Rpbn/US$mn) 67.6 / 5.92 to margin compression following higher industrial farming expansion, with payback
production cost and opex. Yet, Bogasari can period about 3.5 year, to save labor cost
maintain its strong volume growth of 11% YoY significantly from 35% of production cost down
Major shareholder in 4Q13. With 9% volume growth last year to 10-15% which should improve crops
Bogasari has gained market share by 1-2% vs productivity. Weakening of RMB would also
CAB Holdings 50.05% the industry growth of 3-4%. In FY14F, benefit China Minzhong’s export of processed
Others 49.95% management guide conservatively with 3-4% products.
volume growth due to more intense
competition from import market and new Reiterate Buy, higher SOTP. We increase our
EPS consensus (Rp) capacities from Wilmar Group and Toyota SOTP-TP to Rp8,200/share implying 12% upside
Tsusho. Yet, we view the upside risks are and 17.8x – 14.2x P/E14F-15F, which mostly
Mansek Cons Diff
subject to government regulation on “anti attributable to higher valuation from
2014F 461.0 481.5 (4.25) dumping” provision and rule potential agribusiness. INDF is trading attractively at
2015F 595.3 567.8 4.8 outcome 15.9x – 12.3x P/E14F-15F.Reiterate Buy.
2016F 641.4 617.2 3.9
Agribusiness: Robust growth momentum. Key risks. 1)Further weakening IDR against
Agribusiness recorded 4Q13 EBIT of Rp737bn USD, 2.)Valuation de-rating due to economic
Share price performance
(+62%YoY, +134%QoQ) driven by significant slowdown or more intense competition and
EBIT margin recovery from 10.1% in 3Q13 up to 3.)Commodity price volatility.
3m 6m 12m FINANCIAL SUMMARY
Absolute (%) 13.6 5.4 -3.0 YE Dec (Rp Bn) 2012A 2013A 2014F 2015F 2016F
Relative to JCI (%) 1.5 2.4 1.6 EBITDA 7,873 8,388 10,898 13,150 13,931
Net Profit 3,261 2,503 4,048 5,227 5,632
Fully-Diluted EPS (Rp) 371.4 285.0 461.0 595.3 641.4
Fully-Diluted EPS Gr. (%) 6.0 (23.3) 61.8 29.1 7.8
P/E Ratio (x) 19.7 25.7 15.9 12.3 11.4
EV/EBITDA (x) 10.0 10.6 8.6 6.9 6.3
P/B Ratio (x) 3.0 2.7 2.4 2.2 2.0
Dividend Yield (%) 2.4 2.5 1.9 3.1 4.1
ROAE (%) 16.1 11.2 16.2 18.6 18.1
Source: Company (2012-2013), Mandiri Sekuritas (2014-2016)

Please see important disclosure at the back of this report Page 1 of 10

FOCUS | Indofood Sukses Makmur
Company Update | 24 March 2014

INDF At a Glance
FIGURE 1. SALES BREAKDOWN, AS OF 2013 FIGURE 2. EBIT BREAKDOWN TREND
100% 0%
9% 12% 14%
90%
80% 30% 36%
44% 22%
70% 36% 34%
60%
25% 21% 23%
50%
15%
40% 18% 16%

30%
20% 36% 39% 43% 43%
31% 33%
10%
0%
2010 2011 2012 2013 2014F 2015F

ICBP Bogasari Agribusines Distribution China Minzhong

Source: Company, Mandiri Sekuritas Source: Company, Mandiri Sekuritas

FIGURE 3. EBIT MARGIN PER SEGMENT (YEARLY) FIGURE 4. INDF’S MARKET SHARE ON EACH KEY SEGMENT

Source: Company, Mandiri Sekuritas Source: Company, Euromonitor

FIGURE 5. EPS GROWTH TREND FIGURE 6. LEVERAGE & ROE TREND

Source: Company, Mandiri Sekuritas estimates Source: Company, Mandiri Sekuritas estimates

Please see important disclosure at the back of this report Page 2 of 10

FOCUS | Indofood Sukses Makmur
Company Update | 24 March 2014

FY13 results within expectation

FY13 results within expectation. INDF reported FY13 NPAT of Rp2.5tn (-23%YoY), within
our expectation which mainly due to forex loss of Rp1.7tn that mostly attributable to China
Minzhong acquisition. Adjusted for the forex loss, FY13 core NPAT Rp3.3tn (+3%YoY)
considerably in-line with consensus. FY13 EBIT of Rp6.1tn (-10%YoY) was slightly below our
expectation due to margin compression in ICBP and Bogasari during 4Q13. Overall INDF has
enjoyed strong earnings growth in 4Q13 with NPAT of Rp582bn (+166%QoQ) thanks to
agribusiness and China Minzhong

FIGURE 7. INDF’S FY13 RESULTS, WITHIN EXPECTATION

Source: Company, Mandiri Sekuritas

Bogasari: gaining market share

Bogasari recorded 4Q13 EBIT of Rp176bn (-42%YoY, -57%QoQ), weaker than expected
mainly due to margin compression following higher production cost and opex. Yet, Bogasari
can maintain its strong volume growth of 11% YoY in 4Q13. Overall, Bogasari’s FY13 sales
volume grew by 9%YoY vs industry growth of 3-4%. In FY14F, management only guide 3-4%
volume growth due to more intense competition welcoming new mills capacities coming
from Wilmar Group and Toyota Tsusho and also from import market competition. Potential
upside risk subject to government regulation on “anti dumping” provision and rule outcome

Please see important disclosure at the back of this report Page 3 of 10

FOCUS | Indofood Sukses Makmur
Company Update | 24 March 2014

FIGURE 8. BOGASARI QUARTERLY VOLUME GROWTH FIGURE 9. BOGASARI QUARTERLY ASP INCREASE

Source: Company, Mandiri Sekuritas estimates Source: Bloomberg, Mandiri Sekuritas estimates

Agribusiness : Robust growth momentum

We expect INDF’s strong earnings growth momentum in agribusiness would continue in
FY14-FY15F driven by recovery of the Palm oil and Sugar plantation amid rising ASP.
Agribusiness recorded 4Q13 EBIT of Rp737bn (+62%YoY, +134%QoQ) driven by significant
EBIT margin recovery from 10.1% in 3Q13 up to 19.6%, mostly thanks to strong CPO ASP of
Rp8,399/kg (+35%YoY, +14%QoQ) followed by strong CPO sales volume of 235k tons
(+12%YoY, +21%QoQ). In addition, rising trend of sugar prices would also benefit INDF’s
sugar plantation ventures in Brazil and Philippines.
The company expects drought could affect FFB yield in 2H14 which will affect CPO prices
positively. For 2014F, IFAR allocates Rp3tn capex budget for 10-15k ha new planting

FIGURE 10. QUARTERLY CPO & PK ASP (RP/KG) FIGURE 11. QUARTERLY SUGAR ASP (RP/KG)

Source: Company, Mandiri Sekuritas estimates Source: Bloomberg, Mandiri Sekuritas estimates

Please see important disclosure at the back of this report Page 4 of 10

FOCUS | Indofood Sukses Makmur
Company Update | 24 March 2014

FIGURE 12. EBIT MARGIN PER SEGMENT FIGURE 13. IFAR’S QUARTERLY EBITDA – STRONG 4Q13 RESULT

Source: Company, Mandiri Sekuritas estimates Source: Bloomberg, Mandiri Sekuritas estimates

Our CPO analyst, Hariyanto Wijaya, reiterate his bullish view on CPO prices given drought
weather that would likely to affect the FFB yield and CPO supplies. In our view, INDF’s
earnings will benefit from the straight translation of USD revenues driven from its
agribusiness, while most of the costs are IDR-denominated. We estimate agribusiness EBIT
contribution will jump significantly from 22% in FY13 up to 36% in 2014F, normalizing from
historical trend.

FIGURE 14. DROUGHT SEASON WOULD SUPPORT CPO PRICES FIGURE 15. AGRIBUSINESS EBIT CONTRIBUTION WILL JUMP

Source: Oil world Source: Bloomberg, Mandiri Sekuritas estimates

China Minzhong: Proven lucrative

China Minzhong posted strong 2Q FY14 NPAT of RMB201mn (-6%YoY, +317%QoQ), within
our expectation. Strong 2Q FY14 results were driven by rising contribution of brined
products in processed vegetable and improving yield from farmland. China Minzhong is
proven value accretive acquisition to INDF. It contributed 9% FY13 EBIT with 3% of FY13
sales contribution. In FY14F-15F, we forecast China Minzhong to contribute 12%-14% of
INDF’s EBIT.

INDF has allocated Rp1.9tn capex budget for the industrial farming expansion, with payback
period about 3.5 year, to save labor cost and improve crop productivity. Weakening RMB
would benefit China Minzhong’s export processed product..

Please see important disclosure at the back of this report Page 5 of 10

FOCUS | Indofood Sukses Makmur
Company Update | 24 March 2014

FIGURE 16. CHINA MINZHONG 1H FY14 RESULTS WITHIN OUR EXPECTATION

Source: Company, Mandiri Sekuritas

FIGURE 17. CHINA MINZHONG’S EARNINGS PERFORMANCE FIGURE 18. CHINA MINZHONG GROSS MARGIN PER SEGMENT
SEASONALITY

Source: Company, Mandiri Sekuritas estimates Source: Company, Mandiri Sekuritas estimates

Please see important disclosure at the back of this report Page 6 of 10

FOCUS | Indofood Sukses Makmur
Company Update | 24 March 2014

Earnings forecasts changes

We revisit our earnings forecast to incorporate the stronger performance from agribusiness
and weaker performance on ICBP. In addition, post the management guidance we also
incorporate the beverage business performance and new 2014 capex budget about Rp9.6tn
that mostly for capacity expansion, and 5.3% A&P spending on ICBP.

We only lower our FY14F-15F NPAT slightly by 8% and 2% down to Rp4,048bn and
Rp5,227bn mostly due to weaker performance from ICBP and higher interest expense
following higher interest bearing debt on higher capex.

FIGURE 19. INDF EARNINGS FORECAST CHANGES

Source: Mandiri Sekuritas estimates

FIGURE 20. EBIT MARGIN PER SEGMENT FIGURE 21. TOP LINW GROWTH YOY GROWTH TREND –
AGRIBUSINESS WITNESSED STRONG MOMENTUM

Source: Company, Mandiri Sekuritas Source: Company, Mandiri Sekuritas

Please see important disclosure at the back of this report Page 7 of 10

FOCUS | Indofood Sukses Makmur
Company Update | 24 March 2014

SOTP Valuation
We increase our SOTP TP on INDF by 9.3% up to Rp8,200/share implying 12% upside
potential and 17.8x – 13.7x P/E14F -15F mostly driven by higher valuation from agribusiness
and value lucrative from China Minzhong.

INDF now is trading about 12% discount to its NAV based on our calculation vs the lowest
was at 20.0%. The range of this discount has been quite wide historically, from a premium of
15% to a discount 20%. We believe INDF’s valuation potentially could trade at premium to
NAV (expecting narrowing discounted P/E valuation to ICBP), when INDF’s earnings
outperform ICBP. Currently INDF is still trading attractively at 14.6x – 12.1 P/E14F-15F, about
50% discount to ICBP. We reiterate our Buy rating.

FIGURE 22. INDF’S UPDATED SOTP VALUATION

Source: Company, Mandiri Sekuritas

FIGURE 23. INDF’S FORWARD P/E BAND FIGURE 24. INDF NOW IS TRADING AT 13% DISCOUNT TO NAV
PE (x) 35.0%
INDF
30 30.0%
25.0%
25
+1 StDev 20.0%
20
15.0%
15 Mean 10.0%
5.0%
10
-1 StDev 0.0%
5
Dec‐11

Dec‐12

Dec‐13
Aug‐11
Oct‐11

Aug‐12
Oct‐12

Aug‐13
Oct‐13
Apr‐12

Apr‐13
Feb‐12

Feb‐13

Feb‐14
Jun‐11

Jun‐12

Jun‐13

‐5.0%
0 ‐10.0%
Jul-06

Oct-08

Jul-10

Oct-12
Jun-07

Jun-11
Nov-07

Nov-11
Jan-07

Sep-09
Feb-10

Jan-11

Sep-13
Feb-14
May-08

May-12
Mar-09

Mar-13

‐15.0%
‐20.0%

Source: Company, Mandiri Sekuritas Source: Company, Mandiri Sekuritas

Please see important disclosure at the back of this report Page 8 of 10

FOCUS | Indofood Sukses Makmur
Company Update | 24 March 2014

Indofood Sukses Makmur

Profit and Loss Balance Sheet

YE Dec (Rp Bn) 2012A 2013A 2014F 2015F 2016F YE Dec (Rp Bn) 2012A 2013A 2014F 2015F 2016F
Revenue 50,059 57,732 70,684 77,827 85,941 Cash and ST Investment 13,896 17,757 12,486 17,050 20,044
Gross profit 13,566 14,330 18,631 21,826 23,506 Acct Receivable 3,013 4,429 5,533 6,216 7,005
Operating profit 6,745 6,089 8,244 10,271 10,886 Inventory 7,783 8,160 8,155 7,312 6,793
EBITDA 7,873 8,388 10,898 13,150 13,931 Others 1,511 2,118 2,564 2,869 3,150
Net Interest (528) (467) (1,045) (917) (793) Current Assets 26,203 32,464 28,739 33,447 36,992
Interest expense (1,082) (1,073) (1,540) (1,530) (1,437) Investments 296 1,573 1,573 1,573 1,573
Interest income 554 606 495 613 644 Fixed Assets 22,698 30,616 40,360 40,572 40,738
Forex Losses/Gains 0 (1,700) 0 0 0 Others 41,728 54,397 65,555 69,485 73,218
Net Other 92 744 100 71 64 Total Assets 59,324 78,093 82,012 87,771 92,004
Pre-Tax Profit 6,310 4,667 7,299 9,425 10,156
Income Tax (1,530) (1,252) (1,825) (2,356) (2,539) Current Liabilities 13,081 19,471 18,777 18,747 19,532
Others n/a n/a n/a n/a n/a Acct. Payable 2,437 3,677 4,009 3,921 3,974
Minority Interests (1,518) (912) (1,427) (1,842) (1,985) ST Borrowings 6,970 12,020 10,448 10,271 10,721
Net Profit 3,261 2,503 4,048 5,227 5,632 Others 3,674 3,775 4,320 4,554 4,837
Long-Term Liabilities

Cashflow Statement Long-Term Payable 8,354 15,324 15,114 15,104 13,105

YE Dec (Rp Bn) 2012A 2013A 2014F 2015F 2016F Others 3,747 4,925 5,499 6,251 6,690
Total Liabilities 25,182 39,720 39,390 40,102 39,327
Operating Profit 6,745 6,089 8,244 10,271 10,886
Shareholder's Equity 21,209 23,649 26,471 29,676 32,699
Oth.Recurring Income/(Exp) (436) 277 (945) (846) (729)
Depr & Amort 1,128 2,298 2,654 2,880 3,046
Other Gain / Loss (1,297) (912) (1,427) (1,842) (1,985) Key Ratios
Tax (1,530) (1,252) (1,825) (2,356) (2,539) YE Dec (Rp Bn) 2012A 2013A 2014F 2015F 2016F
Change in Working Capital (138) (1,059) (668) 2 (215) Growth (% YoY)
Other Operating Cash Flow (786) (632) 2,066 (839) (522) Sales 10.4 15.3 22.4 10.1 10.4
Operating Cash Flow 3,687 4,810 8,100 7,270 7,941 EBIT 0.4 (9.7) 35.4 24.6 6.0
Capital Expenditure (4,734) (14,235) (12,398) (3,091) (3,211) EBITDA 2.3 6.5 29.9 20.7 5.9
Free Cash Flow (1,047) (9,425) (4,298) 4,178 4,729 Net Profit 6.0 (23.3) 61.8 29.1 7.8
Other Investing Cash Flow 133 43 33 0 0 Profitability (%)
Cash Flow From Investing (4,601) (14,192) (12,365) (3,091) (3,211) Gross Profit Margin 27.1 24.8 26.4 28.0 27.4
Net Change in Debts 1,637 12,019 (1,781) (186) (1,549) Oper. Margin 13.5 10.5 11.7 13.2 12.7
Equity Funds Raised 88 1,585 24 0 0 EBITDA Margin 15.7 14.5 15.4 16.9 16.2
Other Financing Cash Flow 998 2,968 2,001 2,593 2,424 Net Margin 6.5 4.3 5.7 6.7 6.6
Cash Flow From Financing 1,186 14,944 (1,006) 386 (1,735) ROAA 5.8 3.6 5.1 6.2 6.3
Non-Recurring Income (Exp) 0 (1,700) 0 0 0 ROAE 16.1 11.2 16.2 18.6 18.1
Extraordinaries Income (Exp) 0 0 0 0 0 Leverage
Net Change in Cash 272 3,862 (5,271) 4,564 2,994 Net Debt / Equity (%) 4.2 25.0 30.7 17.5 7.2
Cash at beginning 13,624 13,896 17,757 12,486 17,050 EBITDA / Gross Interest (x) 7.3 7.8 7.1 8.6 9.7
Cash at End 13,896 17,757 12,486 17,050 20,044 Per share data (Rp)
EPS 371.4 285.0 461.0 595.3 641.4
Valuation CFPS 499.9 546.7 763.3 923.3 988.3
YE Dec 2012A 2013A 2014F 2015F 2016F BVPS 2,415.6 2,693.2 3,014.9 3,380.0 3,723.8
PER (x) 19.7 25.7 15.9 12.3 11.4 DPS 175.0 185.5 142.3 230.2 297.2
EV/EBITDA (X) 10.0 10.6 8.6 6.9 6.3
P/BV (X) 3.0 2.7 2.4 2.2 2.0
P/CF (X) 14.7 13.4 9.6 7.9 7.4
Dividend Yield (%) 2.4 2.5 1.9 3.1 4.1

Source: Company, Mandiri Sekuritas estimates

Please see important disclosure at the back of this report Page 9 of 10

 Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk
Plaza Mandiri 28th Floor, Jl. Jend. Gatot Subroto Kav. 36 - 38, Jakarta 12190, Indonesia
General: +62 21 526 3445, Fax : +62 21 527 5711 (Equity Research), +62 21 527 5374 (Equity Sales)

RESEARCH
John Rachmat Head of Equity Research, Strategy [email protected] +6221 5296 9542
Tjandra Lienandjaja Banking [email protected] +6221 5296 9617
Handoko Wijoyo Construction, Toll Road [email protected] +6221 5296 9418
Hariyanto Wijaya, CFA, CFP, CA, CPA Plantation, Heavy eq., Energy [email protected] +6221 5296 9553
Herman Koeswanto, CFA Consumer, Poultry [email protected] +6221 5296 9569
Liliana S Bambang Property, Building Material [email protected] +6221 5296 9465
Ariyanto Kurniawan Telecom, Coal & Metal Mining [email protected] +6221 5296 9682
Aldian Taloputra Economist [email protected] +6221 5296 9572
Leo Putra Rinaldy Economist [email protected] +6221 5296 9406
Rizky Hidayat Research Assistant [email protected] +6221 5296 9415
Vanessa Ariati Tanuwijaya Research Assistant [email protected] +6221 5296 9546
Wisnu Trihatmojo Research Assistant [email protected] +6221 5296 9544

INSTITUTIONAL SALES
Lokman Lie Co-Head Institutional Equities [email protected] +6221 527 5375
Silva Halim Co-Head Institutional Equities [email protected] +6221 527 5375
Andrew Handaya Institutional Sales [email protected] +6221 527 5375
Cindy Amelia P. Kalangie Institutional Sales [email protected] +6221 527 5375
Jane Theodoven Sukardi Institutional Sales [email protected] +6221 527 5375
Janefer Amanda Soelaiman Institutional Sales [email protected] +6221 527 5375
Karmia Tandjung-Nasution Institutional Sales [email protected] +6221 527 5375
Mirna Santikara Salim Institutional Sales [email protected] +6221 527 5375
Oos Rosadi Institutional Sales [email protected] +6221 527 5375
Vera Ongyono Institutional Sales [email protected] +6221 527 5375
Yohan Setio, CFA Institutional Sales [email protected] +6221 527 5375
Zahra Aldila Niode Institutional Sales [email protected] +6221 527 5375
Kusnadi Widjaja Equity Dealing [email protected] +6221 527 5375
Edwin Pradana Setiadi Equity Dealing [email protected] +6221 527 5375

RETAIL SALES
Ridwan Pranata Head Retail Equities [email protected] +6221 5296 9514
Boy Triyono Jakarta Branch [email protected] +6221 5296 9436
Yohanes Triyanto Kelapa Gading Branch [email protected] +6221 45845355
Hendra Riady Mangga Dua Branch [email protected] +6221 6230 2333
Umar Abdullah Pondok Indah Branch [email protected] +6221 75918400
Indra Mas’ari Bandung Branch indra.mas’[email protected] +6222 426-5088
Yuri Ariadi Pontianak Branch [email protected] +62561 582292
Ruwie Medan Branch [email protected] +6261 457 1116

INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12-month period from the date of the the last
published report, are: Buy (10% or higher), Neutral (-10% to10%) and Sell (-10% or lower).

DISCLAIMER: This report is issued by PT. Mandiri Sekuritas, a member of the Indonesia Stock Exchanges (IDX). Although the contents of this document may
represent the opinion of PT. Mandiri Sekuritas, deriving its judgement from materials and sources believed to be reliable, PT. Mandiri Sekuritas or any other
company in the Mandiri Group cannot guarantee its accuracy and completeness. PT. Mandiri Sekuritas or any other company in the Mandiri Group may be
involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Mandiri Sekuritas or
any other company in the Mandiri Group may seek or will seek investment banking or other business relationships with the companies in this report. For
further information please contact our number 62-21-5263445 or fax 62-21-5275711.

ANALYSTS CERTIFICATION: Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her views about the
companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be
influenced by any part or all of his or her compensation.