Does Falanx Group's (LON:FLX) CEO Salary Compare Well With The Performance Of The Company?

Mike Read became the CEO of Falanx Group Limited (LON:FLX) in 2017, 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 assess whether Falanx Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Falanx Group

Comparing Falanx Group Limited's CEO Compensation With the industry

At the time of writing, our data shows that Falanx Group Limited has a market capitalization of UK£4.9m, and reported total annual CEO compensation of UK£109k for the year to March 2020. That's a notable decrease of 37% on last year. Notably, the salary of UK£109k is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below UK£150m, reported a median total CEO compensation of UK£292k. That is to say, Mike Read is paid under the industry median. Moreover, Mike Read also holds UK£142k worth of Falanx Group stock directly under their own name.

Talking in terms of the industry, salary represented approximately 80% of total compensation out of all the companies we analyzed, while other remuneration made up 20% of the pie. Speaking on a company level, Falanx Group prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Falanx Group Limited's Growth Numbers

Falanx Group Limited's earnings per share (EPS) grew 35% per year over the last three years. Its revenue is up 12% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Falanx Group Limited Been A Good Investment?

With a three year total loss of 78% for the shareholders, Falanx Group Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Falanx Group rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, Falanx Group pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Importantly though, the company has impressed with its EPS growth over three years. Considering EPS are on the up, we would say Mike is compensated fairly. But shareholders will likely want to hold off on any raise for Mike until investor returns are positive.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Falanx Group (2 are a bit concerning!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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