Here's Why Shareholders May Want To Be Cautious With Increasing ClearView Wealth Limited's (ASX:CVW) CEO Pay Packet

In the past three years, shareholders of ClearView Wealth Limited (ASX:CVW) have seen a loss on their investment. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 09 November 2022 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out the opportunities and risks within the AU Diversified Financial industry.

Comparing ClearView Wealth Limited's CEO Compensation With The Industry

At the time of writing, our data shows that ClearView Wealth Limited has a market capitalization of AU$321m, and reported total annual CEO compensation of AU$1.2m for the year to June 2022. Notably, that's an increase of 13% over the year before. In particular, the salary of AU$701.9k, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$156m and AU$624m had a median total CEO compensation of AU$951k. This suggests that ClearView Wealth remunerates its CEO largely in line with the industry average. Furthermore, Simon Swanson directly owns AU$7.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	AU$702k	AU$681k	60%
Other	AU$475k	AU$361k	40%
Total Compensation	AU$1.2m	AU$1.0m	100%

Talking in terms of the industry, salary represented approximately 60% of total compensation out of all the companies we analyzed, while other remuneration made up 40% of the pie. ClearView Wealth is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ClearView Wealth Limited's Growth

Over the past three years, ClearView Wealth Limited has seen its earnings per share (EPS) grow by 38% per year. Its revenue is down 79% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has ClearView Wealth Limited Been A Good Investment?

Given the total shareholder loss of 14% over three years, many shareholders in ClearView Wealth Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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. In our study, we found 2 warning signs for ClearView Wealth you should be aware of, and 1 of them doesn't sit too well with us.

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.

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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.