Terry Wise became the CEO of Forward Industries, Inc. (NASDAQ:FORD) in 2015, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Forward Industries
Comparing Forward Industries, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Forward Industries, Inc. has a market capitalization of US$18m, and reported total annual CEO compensation of US$400k for the year to September 2020. We note that's an increase of 33% above last year. In particular, the salary of US$300.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$513k. This suggests that Forward Industries remunerates its CEO largely in line with the industry average. What's more, Terry Wise holds US$3.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | US$300k | US$300k | 75% |
| Other | US$100k | - | 25% |
| Total Compensation | US$400k | US$300k | 100% |
On an industry level, around 29% of total compensation represents salary and 71% is other remuneration. Forward Industries is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Forward Industries, Inc.'s Growth
Over the last three years, Forward Industries, Inc. has shrunk its earnings per share by 93% per year. In the last year, its revenue is down 7.8%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Forward Industries, Inc. Been A Good Investment?
Boasting a total shareholder return of 55% over three years, Forward Industries, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As previously discussed, Terry is compensated close to the median for companies of its size, and which belong to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We're not saying CEO compensation is too generous, but shrinking EPS is undoubtedly an issue that will have to be addressed.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Forward Industries (1 is 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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About NasdaqCM:FORD
Forward Industries
Designs, manufactures, sources, markets, and distributes carry and protective solutions.
Excellent balance sheet and slightly overvalued.
