Shareholders May Be Wary Of Increasing Axis Auto Finance Inc.'s (TSE:AXIS) CEO Compensation Package

Key Insights

• Axis Auto Finance will host its Annual General Meeting on 21st of December
• Salary of CA$375.0k is part of CEO Todd Hudson's total remuneration
• The total compensation is similar to the average for the industry
• Axis Auto Finance's three-year loss to shareholders was 81% while its EPS was down 134% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Axis Auto Finance Inc. (TSE:AXIS) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 21st of December. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Axis Auto Finance

How Does Total Compensation For Todd Hudson Compare With Other Companies In The Industry?

At the time of writing, our data shows that Axis Auto Finance Inc. has a market capitalization of CA$7.3m, and reported total annual CEO compensation of CA$410k for the year to June 2023. This was the same as last year. In particular, the salary of CA$375.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Canada Consumer Finance industry with market capitalizations under CA$268m, the reported median total CEO compensation was CA$410k. This suggests that Axis Auto Finance remunerates its CEO largely in line with the industry average. Furthermore, Todd Hudson directly owns CA$628k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	CA$375k	CA$375k	91%
Other	CA$35k	CA$35k	9%
Total Compensation	CA$410k	CA$410k	100%

On an industry level, around 39% of total compensation represents salary and 61% is other remuneration. Axis Auto Finance pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. 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.

Axis Auto Finance Inc.'s Growth

Axis Auto Finance Inc. has reduced its earnings per share by 134% a year over the last three years. In the last year, its revenue is down 61%.

Few shareholders would be pleased to read that EPS have declined. 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. 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 Axis Auto Finance Inc. Been A Good Investment?

With a total shareholder return of -81% over three years, Axis Auto Finance Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for Axis Auto Finance that you should be aware of before investing.

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.