Shareholders May Find It Hard To Justify Increasing Fobi AI Inc.'s (CVE:FOBI) CEO Compensation For Now

Key Insights

• Fobi AI's Annual General Meeting to take place on 6th of June
• Total pay for CEO Rob Anson includes CA$250.0k salary
• The total compensation is similar to the average for the industry
• Fobi AI's EPS grew by 5.1% over the past three years while total shareholder loss over the past three years was 95%

Shareholders of Fobi AI Inc. (CVE:FOBI) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 6th of June. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Fobi AI

How Does Total Compensation For Rob Anson Compare With Other Companies In The Industry?

Our data indicates that Fobi AI Inc. has a market capitalization of CA$17m, and total annual CEO compensation was reported as CA$350k for the year to June 2023. That's a notable increase of 40% on last year. We note that the salary portion, which stands at CA$250.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Canadian Software industry with market capitalizations below CA$273m, reported a median total CEO compensation of CA$323k. This suggests that Fobi AI remunerates its CEO largely in line with the industry average. Moreover, Rob Anson also holds CA$571k worth of Fobi AI stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CA$250k	CA$250k	71%
Other	CA$100k	-	29%
Total Compensation	CA$350k	CA$250k	100%

On an industry level, around 72% of total compensation represents salary and 28% is other remuneration. Our data reveals that Fobi AI allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Fobi AI Inc.'s Growth

Over the past three years, Fobi AI Inc. has seen its earnings per share (EPS) grow by 5.1% per year. In the last year, its revenue is up 60%.

It's hard to interpret the strong revenue growth as anything other than a positive. And in that context, the modest EPS improvement certainly isn't shabby. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Fobi AI Inc. Been A Good Investment?

The return of -95% over three years would not have pleased Fobi AI Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 5 warning signs for Fobi AI (1 shouldn't be ignored!) that you should be aware of before investing here.

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.