How Does Fluence’s (ASX:FLC) CEO Pay Compare With Company Performance?

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 assess whether Fluence pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out 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$131m, and reported total annual CEO compensation of US$2.1m for the year to December 2019. That’s just a smallish increase of 5.0% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$900k.

For comparison, other companies in the industry with market capitalizations below AU$279m, reported a median total CEO compensation of US$302k. Hence, we can conclude that Henry Charrabé is remunerated higher than the industry median.

Component20192018Proportion (2019)
Salary US$900k US$900k 43%
Other US$1.2m US$1.1m 57%
Total CompensationUS$2.1m US$2.0m100%

On an industry level, roughly 80% of total compensation represents salary and 20% is other remuneration. It’s interesting to note that Fluence allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ASX:FLC CEO Compensation July 30th 2020

Fluence Corporation Limited’s Growth

Fluence Corporation Limited has reduced its earnings per share by 8.6% a year over the last three years. Its revenue is down 39% over the previous year.

The decline in earnings is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what’s coming up next but if you want to peer into the company’s future you might be interested in this free visualization of analyst forecasts.

Has Fluence Corporation Limited Been A Good Investment?

With a three year total loss of 76% for the shareholders, Fluence Corporation Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary…

As we touched on above, Fluence Corporation Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn’t look great when you see shareholder returns have been negative over the last three years. To make matters worse, earnings growth has also been negative during this period. Considering such poor performance, we think shareholders might be concerned if the CEO’s compensation were to grow.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 4 warning signs for Fluence that investors should look into moving forward.

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.

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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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