Increases to CEO Compensation Might Be Put On Hold For Now at Fonterra Co-operative Group Limited (NZSE:FCG)

Key Insights

• Fonterra Co-operative Group to hold its Annual General Meeting on 8th of November
• Total pay for CEO Miles Hurrell includes NZ$2.37m salary
• Total compensation is 134% above industry average
• Over the past three years, Fonterra Co-operative Group's EPS grew by 14% and over the past three years, the total loss to shareholders 17%

The underwhelming share price performance of Fonterra Co-operative Group Limited (NZSE:FCG) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 8th of November. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Fonterra Co-operative Group

How Does Total Compensation For Miles Hurrell Compare With Other Companies In The Industry?

According to our data, Fonterra Co-operative Group Limited has a market capitalization of NZ$4.3b, and paid its CEO total annual compensation worth NZ$4.6m over the year to July 2023. That's a modest increase of 6.9% on the prior year. In particular, the salary of NZ$2.37m, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the New Zealander Food industry with market capitalizations ranging between NZ$3.4b and NZ$11b had a median total CEO compensation of NZ$2.0m. This suggests that Miles Hurrell is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	NZ$2.4m	NZ$2.2m	51%
Other	NZ$2.2m	NZ$2.1m	49%
Total Compensation	NZ$4.6m	NZ$4.3m	100%

On an industry level, around 81% of total compensation represents salary and 19% is other remuneration. It's interesting to note that Fonterra Co-operative Group allocates a smaller portion of compensation to salary in comparison to the broader industry. 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.

Fonterra Co-operative Group Limited's Growth

Over the past three years, Fonterra Co-operative Group Limited has seen its earnings per share (EPS) grow by 14% per year. 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. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Fonterra Co-operative Group Limited Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in Fonterra Co-operative Group Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Fonterra Co-operative Group that you should be aware of before investing.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.