Stock Analysis

We Think Some Shareholders May Hesitate To Increase Foley Wines Limited's (NZSE:FWL) CEO Compensation

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NZSE:FWL
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As many shareholders of Foley Wines Limited (NZSE:FWL) will be aware, they have not made a gain on their investment in the past three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 16 November 2022 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

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Comparing Foley Wines Limited's CEO Compensation With The Industry

Our data indicates that Foley Wines Limited has a market capitalization of NZ$89m, and total annual CEO compensation was reported as NZ$950k for the year to June 2022. Notably, that's an increase of 12% over the year before. We note that the salary of NZ$550.0k makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under NZ$339m, the reported median total CEO compensation was NZ$660k. This suggests that Mark Turnbull is paid more than the median for the industry.

Component20222021Proportion (2022)
Salary NZ$550k NZ$550k 58%
Other NZ$400k NZ$300k 42%
Total CompensationNZ$950k NZ$850k100%

On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. Foley Wines sets aside a smaller share of compensation for salary, in comparison to the overall 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.

ceo-compensation
NZSE:FWL CEO Compensation November 10th 2022

A Look at Foley Wines Limited's Growth Numbers

Over the past three years, Foley Wines Limited has seen its earnings per share (EPS) grow by 17% per year. In the last year, its revenue changed by just 0.5%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Foley Wines Limited Been A Good Investment?

Since shareholders would have lost about 11% over three years, some Foley Wines Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Foley Wines that investors should look into moving forward.

Important note: Foley Wines 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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