This article will reflect on the compensation paid to Darren Pateman who has served as CEO of Finbar Group Limited (ASX:FRI) since 2010. This analysis will also assess whether Finbar Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Finbar Group
Comparing Finbar Group Limited's CEO Compensation With the industry
According to our data, Finbar Group Limited has a market capitalization of AU$242m, and paid its CEO total annual compensation worth AU$926k over the year to June 2020. We note that's a small decrease of 5.5% on last year. We note that the salary portion, which stands at AU$668.9k constitutes the majority of total compensation received by the CEO.
On comparing similar companies from the same industry with market caps ranging from AU$129m to AU$515m, we found that the median CEO total compensation was AU$926k. So it looks like Finbar Group compensates Darren Pateman in line with the median for the industry. Moreover, Darren Pateman also holds AU$3.2m worth of Finbar Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$669k | AU$670k | 72% |
| Other | AU$257k | AU$311k | 28% |
| Total Compensation | AU$926k | AU$980k | 100% |
On an industry level, around 81% of total compensation represents salary and 19% is other remuneration. It's interesting to note that Finbar Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Finbar Group Limited's Growth Numbers
Finbar Group Limited has seen its earnings per share (EPS) increase by 2.0% a year over the past three years. In the last year, its revenue changed by just 0.3%.
We generally like to see a little revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Finbar Group Limited Been A Good Investment?
Finbar Group Limited has generated a total shareholder return of 5.7% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
To Conclude...
As we touched on above, Finbar Group Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has failed to produce substantial growth in either EPS or total shareholder return. So, although the CEO compensation seems reasonable, shareholders might want to see some further progress before they agree that Darren should get a raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 2 which don't sit too well with us) in Finbar Group we think you should know about.
Switching gears from Finbar 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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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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About ASX:FRI
Finbar Group
Engages in the property development and investment in Australia.
Good value with acceptable track record.
