Here's Why FAT Brands Inc.'s (NASDAQ:FAT) CEO Compensation Is The Least Of Shareholders' Concerns

CEO Andy Wiederhorn has done a decent job of delivering relatively good performance at FAT Brands Inc. (NASDAQ:FAT) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 19 October 2021. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

See our latest analysis for FAT Brands

How Does Total Compensation For Andy Wiederhorn Compare With Other Companies In The Industry?

At the time of writing, our data shows that FAT Brands Inc. has a market capitalization of US$140m, and reported total annual CEO compensation of US$406k for the year to December 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of US$400.0k, 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$495k. So it looks like FAT Brands compensates Andy Wiederhorn in line with the median for the industry. Moreover, Andy Wiederhorn also holds US$67m worth of FAT Brands stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$400k	US$400k	99%
Other	US$5.5k	US$14k	1%
Total Compensation	US$406k	US$414k	100%

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Investors will find it interesting that FAT Brands pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at FAT Brands Inc.'s Growth Numbers

FAT Brands Inc. has reduced its earnings per share by 84% a year over the last three years. It achieved revenue growth of 32% over the last year.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has FAT Brands Inc. Been A Good Investment?

Boasting a total shareholder return of 61% over three years, FAT Brands Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

FAT Brands pays its CEO a majority of compensation through a salary. The overall company performance has been commendable, however there are still areas for improvement. Despite robust revenue growth, until EPS growth improves, shareholders may be hesitant to increase CEO pay by too much.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for FAT Brands (1 doesn't sit too well with us!) that you should be aware of before investing here.

Switching gears from FAT Brands, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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