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The performance at FinTech Chain Limited (ASX:FTC) has been rather lacklustre of late and shareholders may be wondering what CEO John Xiong is planning to do about this. At the next AGM coming up on 28 September 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.
Comparing FinTech Chain Limited's CEO Compensation With the industry
At the time of writing, our data shows that FinTech Chain Limited has a market capitalization of AU$40m, and reported total annual CEO compensation of CN¥714k for the year to March 2021. Notably, that's an increase of 23% over the year before. In particular, the salary of CN¥700.5k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$276m, we found that the median total CEO compensation was CN¥2.0m. This suggests that John Xiong is paid below the industry median. What's more, John Xiong holds AU$14m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 47% of total compensation represents salary and 53% is other remuneration. FinTech Chain 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 FinTech Chain Limited's Growth Numbers
FinTech Chain Limited's earnings per share (EPS) grew 114% per year over the last three years. It achieved revenue growth of 54% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has FinTech Chain Limited Been A Good Investment?
Given the total shareholder loss of 23% over three years, many shareholders in FinTech Chain Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.
John receives almost all of their compensation through a salary. The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 2 which don't sit too well with us) in FinTech Chain we think you should know about.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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