Our Take On Foraco International's (TSE:FAR) CEO Salary

Daniel Simoncini became the CEO of Foraco International SA (TSE:FAR) in 1997, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. 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 Foraco International

How Does Total Compensation For Daniel Simoncini Compare With Other Companies In The Industry?

According to our data, Foraco International SA has a market capitalization of CA$44m, and paid its CEO total annual compensation worth S$941k over the year to December 2019. We note that's a small decrease of 4.6% on last year. We note that the salary portion, which stands at US$763.7k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below CA$257m, reported a median total CEO compensation of S$155k. This suggests that Daniel Simoncini is paid more than the median for the industry. Moreover, Daniel Simoncini also holds CA$6.6m worth of Foraco International stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 93% of total compensation represents salary and 7.0% is other remuneration. It's interesting to note that Foraco International 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 Foraco International SA's Growth Numbers

Over the past three years, Foraco International SA has seen its earnings per share (EPS) grow by 78% per year. It saw its revenue drop 1.8% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Foraco International SA Been A Good Investment?

Foraco International SA has served shareholders reasonably well, with a total return of 24% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we touched on above, Foraco International SA is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, we must not forget that the EPS growth has been very strong over three years. We also think investor returns are steady over the same time period. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Foraco International (1 is a bit concerning!) that you should be aware of before investing here.

Important note: Foraco International 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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