Here's Why Shareholders May Want To Be Cautious With Increasing AoFrio Limited's (NZSE:AOF) CEO Pay Packet

Key Insights

• AoFrio will host its Annual General Meeting on 28th of May
• Total pay for CEO Greg Balla includes NZ$485.4k salary
• The total compensation is similar to the average for the industry
• AoFrio's EPS declined by 100% over the past three years while total shareholder loss over the past three years was 27%

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The underwhelming share price performance of AoFrio Limited (NZSE:AOF) in the past three years would have disappointed many shareholders. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 28th of May, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

View our latest analysis for AoFrio

Comparing AoFrio Limited's CEO Compensation With The Industry

Our data indicates that AoFrio Limited has a market capitalization of NZ$44m, and total annual CEO compensation was reported as NZ$500k for the year to December 2024. This was the same amount the CEO received in the prior year. Notably, the salary which is NZ$485.4k, represents most of the total compensation being paid.

In comparison with other companies in the New Zealand Electrical industry with market capitalizations under NZ$337m, the reported median total CEO compensation was NZ$542k. From this we gather that Greg Balla is paid around the median for CEOs in the industry.

Component	2024	2024	Proportion (2024)
Salary	NZ$485k	NZ$485k	97%
Other	NZ$15k	NZ$15k	3%
Total Compensation	NZ$500k	NZ$500k	100%

On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. AoFrio is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. 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.

A Look at AoFrio Limited's Growth Numbers

Over the last three years, AoFrio Limited has shrunk its earnings per share by 100% per year. In the last year, its revenue is up 20%.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 AoFrio Limited Been A Good Investment?

With a three year total loss of 27% for the shareholders, AoFrio Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

AoFrio pays its CEO a majority of compensation through a salary. The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. Shareholders will get the chance at the upcoming AGM 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for AoFrio (1 is a bit unpleasant!) 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. 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.