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Neil Sheather became the CEO of Finexia Financial Group Limited (ASX:FNX) in 2014, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Finexia Financial Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Finexia Financial Group Limited's CEO Compensation With the industry
Our data indicates that Finexia Financial Group Limited has a market capitalization of AU$7.9m, and total annual CEO compensation was reported as AU$231k for the year to June 2020. Notably, that's a decrease of 14% over the year before. Notably, the salary which is AU$227.6k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below AU$285m, we found that the median total CEO compensation was AU$509k. That is to say, Neil Sheather is paid under the industry median. What's more, Neil Sheather holds AU$316k worth of shares in the company in their own name.
On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. Finexia Financial Group pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Finexia Financial Group Limited's Growth Numbers
Over the last three years, Finexia Financial Group Limited has shrunk its earnings per share by 56% per year. It achieved revenue growth of 5.5% over the last year.
Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Finexia Financial Group Limited Been A Good Investment?
Boasting a total shareholder return of 367% over three years, Finexia Financial Group Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Finexia Financial Group pays its CEO a majority of compensation through a salary. As we touched on above, Finexia Financial Group Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. And although the company is suffering from declining EPS growth over the past three years, shareholder returns remain strong. So, while it would be nice to have better EPS growth, our analysis suggests CEO compensation is quite modest.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 2 which shouldn't be ignored) in Finexia Financial Group we think you should know about.
Switching gears from Finexia Financial Group, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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