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How Should Investors React To Fluence's (ASX:FLC) CEO Pay?

Simply Wall St
·3-min read

The CEO of Fluence Corporation Limited (ASX:FLC) is Henry Charrabé, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Fluence

How Does Total Compensation For Henry Charrabé Compare With Other Companies In The Industry?

At the time of writing, our data shows that Fluence Corporation Limited has a market capitalization of AU$128m, and reported total annual CEO compensation of US$2.1m for the year to December 2019. That's a modest increase of 5.0% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$900k.

On comparing similar-sized companies in the industry with market capitalizations below AU$280m, we found that the median total CEO compensation was US$262k. Accordingly, our analysis reveals that Fluence Corporation Limited pays Henry Charrabé north of the industry median.

Component

2019

2018

Proportion (2019)

Salary

US$900k

US$900k

43%

Other

US$1.2m

US$1.1m

57%

Total Compensation

US$2.1m

US$2.0m

100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. Fluence sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

Fluence Corporation Limited's Growth

Fluence Corporation Limited has seen its earnings per share (EPS) increase by 23% a year over the past three years. It achieved revenue growth of 3.4% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Fluence Corporation Limited Been A Good Investment?

Since shareholders would have lost about 68% over three years, some Fluence Corporation Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we noted earlier, Fluence pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but it's disappointing to see negative shareholder returns over the same period. Considering overall performance, we can't say Henry is underpaid, in fact compensation is definitely on the higher side.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Fluence that investors should think about before committing capital to this stock.

Switching gears from Fluence, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.