Stock Analysis
This article will reflect on the compensation paid to Rene Sugo who has served as CEO of MNF Group Limited (ASX:MNF) since 2012. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for MNF Group
Comparing MNF Group Limited's CEO Compensation With the industry
According to our data, MNF Group Limited has a market capitalization of AU$387m, and paid its CEO total annual compensation worth AU$651k over the year to June 2020. We note that's an increase of 18% above last year. In particular, the salary of AU$517.0k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations ranging from AU$129m to AU$517m, the reported median CEO total compensation was AU$673k. So it looks like MNF Group compensates Rene Sugo in line with the median for the industry. Furthermore, Rene Sugo directly owns AU$32m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$517k | AU$517k | 79% |
| Other | AU$134k | AU$32k | 21% |
| Total Compensation | AU$651k | AU$549k | 100% |
Talking in terms of the industry, salary represented approximately 45% of total compensation out of all the companies we analyzed, while other remuneration made up 55% of the pie. It's interesting to note that MNF Group pays out a greater portion of remuneration through salary, compared to the industry. 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.
MNF Group Limited's Growth
Over the last three years, MNF Group Limited has shrunk its earnings per share by 4.9% per year. Its revenue is up 7.1% over the last year.
Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 MNF Group Limited Been A Good Investment?
Since shareholders would have lost about 30% over three years, some MNF Group Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As we noted earlier, MNF Group pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at MNF Group.
Important note: MNF Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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:SYM
Symbio Holdings
Symbio Holdings Limited provides communication services to software companies, telecom providers, and enterprise customers in Australia, New Zealand, and Internationally.
Flawless balance sheet with reasonable growth potential.
