OFX Group Limited's (ASX:OFX) CEO Might Not Expect Shareholders To Be So Generous This Year

By
Simply Wall St
Published
August 19, 2021
ASX:OFX
Source: Shutterstock

Shareholders will probably not be too impressed with the underwhelming results at OFX Group Limited (ASX:OFX) recently. At the upcoming AGM on 26 August 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for OFX Group

Comparing OFX Group Limited's CEO Compensation With the industry

At the time of writing, our data shows that OFX Group Limited has a market capitalization of AU$409m, and reported total annual CEO compensation of AU$1.2m for the year to March 2021. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is AU$664.7k, represents a considerable chunk of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from AU$138m to AU$553m, the reported median CEO total compensation was AU$640k. This suggests that Skander Malcolm is paid more than the median for the industry. Furthermore, Skander Malcolm directly owns AU$4.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary AU$665k AU$657k 55%
Other AU$546k AU$543k 45%
Total CompensationAU$1.2m AU$1.2m100%

On an industry level, around 55% of total compensation represents salary and 45% is other remuneration. Our data reveals that OFX Group allocates salary more or less in line with the wider market. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
ASX:OFX CEO Compensation August 19th 2021

OFX Group Limited's Growth

Over the last three years, OFX Group Limited has shrunk its earnings per share by 12% per year. In the last year, its revenue is down 2.6%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 OFX Group Limited Been A Good Investment?

With a three year total loss of 13% for the shareholders, OFX Group Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for OFX Group that investors should think about before committing capital to this stock.

Switching gears from OFX Group, 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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