We Discuss Why Geneva Finance Limited's (NZSE:GFL) CEO May Deserve A Higher Pay Packet

Shareholders will be pleased by the robust performance of Geneva Finance Limited (NZSE:GFL) recently and this will be kept in mind in the upcoming AGM on 24 August 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.

Check out our latest analysis for Geneva Finance

How Does Total Compensation For David O'Connell Compare With Other Companies In The Industry?

At the time of writing, our data shows that Geneva Finance Limited has a market capitalization of NZ$51m, and reported total annual CEO compensation of NZ$528k for the year to March 2021. We note that's a small decrease of 6.7% on last year. Notably, the salary of NZ$528k is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below NZ$285m, we found that the median total CEO compensation was NZ$1.2m. In other words, Geneva Finance pays its CEO lower than the industry median. What's more, David O'Connell holds NZ$267k worth of shares in the company in their own name.

Component	2021	2020	Proportion (2021)
Salary	NZ$528k	NZ$516k	100%
Other	-	NZ$50k	-
Total Compensation	NZ$528k	NZ$566k	100%

Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. At the company level, Geneva Finance pays David O'Connell solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Geneva Finance Limited's Growth Numbers

Earnings per share at Geneva Finance Limited are much the same as they were three years ago, albeit slightly lower. In the last year, its revenue is up 21%.

The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Geneva Finance Limited Been A Good Investment?

Most shareholders would probably be pleased with Geneva Finance Limited for providing a total return of 36% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Geneva Finance rewards its CEO solely through a salary, ignoring non-salary benefits completely. While the company seems to be headed in the right direction performance-wise, there's always room for improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is concerning) in Geneva Finance we think you should know about.

Important note: Geneva Finance 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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