We Think The Compensation For FinTech Chain Limited's (ASX:FTC) CEO Looks About Right

Performance at FinTech Chain Limited (ASX:FTC) has been rather uninspiring recently and shareholders may be wondering how CEO John Xiong plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 28 September 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for FinTech Chain

Comparing FinTech Chain Limited's CEO Compensation With the industry

At the time of writing, our data shows that FinTech Chain Limited has a market capitalization of AU$40m, and reported total annual CEO compensation of CN¥714k for the year to March 2021. We note that's an increase of 23% above last year. We note that the salary portion, which stands at CN¥700.5k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$276m, we found that the median total CEO compensation was CN¥2.0m. In other words, FinTech Chain pays its CEO lower than the industry median. What's more, John Xiong holds AU$14m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	CN¥701k	CN¥570k	98%
Other	CN¥13k	CN¥9.2k	2%
Total Compensation	CN¥714k	CN¥579k	100%

Speaking on an industry level, nearly 47% of total compensation represents salary, while the remainder of 53% is other remuneration. FinTech Chain is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to 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.

FinTech Chain Limited's Growth

FinTech Chain Limited's earnings per share (EPS) grew 114% per year over the last three years. Its revenue is up 54% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast 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 FinTech Chain Limited Been A Good Investment?

Given the total shareholder loss of 23% over three years, many shareholders in FinTech Chain Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

FinTech Chain pays its CEO a majority of compensation through a salary. The fact that shareholders have earned a negative share price return is certainly disconcerting. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 2 which are a bit unpleasant) in FinTech Chain we think you should know about.

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.

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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.
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