The results at FIH group plc (LON:FIH) have been quite disappointing recently and CEO John Foster bears some responsibility for this. At the upcoming AGM on 09 September 2021, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.
How Does Total Compensation For John Foster Compare With Other Companies In The Industry?
At the time of writing, our data shows that FIH group plc has a market capitalization of UK£28m, and reported total annual CEO compensation of UK£197k for the year to March 2021. Notably, that's a decrease of 12% over the year before. In particular, the salary of UK£196.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below UK£145m, reported a median total CEO compensation of UK£199k. This suggests that FIH group remunerates its CEO largely in line with the industry average. What's more, John Foster holds UK£263k worth of shares in the company in their own name.
On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. Investors will find it interesting that FIH group pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at FIH group plc's Growth Numbers
Over the last three years, FIH group plc has shrunk its earnings per share by 85% per year. In the last year, its revenue is down 27%.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 FIH group plc Been A Good Investment?
With a total shareholder return of -32% over three years, FIH group plc shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.
John receives almost all of their compensation through a salary. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
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 3 warning signs (and 2 which are significant) in FIH group we think you should know about.
Important note: FIH 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. 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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