Yahoo Finance Why Flexiroam's (ASX:FRX) CEO Pay Matters
Jefrey (Jef) Ong became the CEO of Flexiroam Limited (ASX:FRX) 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Flexiroam
How Does Total Compensation For Jefrey (Jef) Ong Compare With Other Companies In The Industry?
According to our data, Flexiroam Limited has a market capitalization of AU$11m, and paid its CEO total annual compensation worth AU$159k over the year to March 2020. That's a slight decrease of 3.7% on the prior year. In particular, the salary of AU$154.4k, 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$273m, we found that the median total CEO compensation was AU$325k. That is to say, Jefrey (Jef) Ong is paid under the industry median. Furthermore, Jefrey (Jef) Ong directly owns AU$1.4m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$154k | AU$161k | 97% |
Other | AU$4.2k | AU$4.0k | 3% |
Total Compensation | AU$159k | AU$165k | 100% |
Speaking on an industry level, nearly 46% of total compensation represents salary, while the remainder of 54% is other remuneration. Flexiroam has gone down a largely traditional route, paying Jefrey (Jef) Ong a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Flexiroam Limited's Growth
Flexiroam Limited has seen its earnings per share (EPS) increase by 33% a year over the past three years. Its revenue is up 23% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 Flexiroam Limited Been A Good Investment?
Given the total shareholder loss of 59% over three years, many shareholders in Flexiroam Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
Jefrey (Jef) receives almost all of their compensation through a salary. As previously discussed, Jefrey (Jef) is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. However we must not forget that the EPS growth has been very strong over three years. Although we would've liked to see positive investor returns, it would be bold of us to criticize CEO compensation when EPS are up. Shareholders, though, would ideally like to see shareholder returns head north before they agree to any raise.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Flexiroam (of which 2 are concerning!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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