Is INTL FCStone Inc.’s (NASDAQ:INTL) CEO Being Overpaid?

Sean O’Connor has been the CEO of INTL FCStone Inc. (NASDAQ:INTL) since 2002. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for INTL FCStone

How Does Sean O’Connor’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that INTL FCStone Inc. has a market cap of US$606m, and reported total annual CEO compensation of US$5.8m for the year to September 2019. We note that’s an increase of 118% above last year. We think total compensation is more important but we note that the CEO salary is lower, at US$500k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$3.3m.

Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 11% of total compensation represents salary and 89% is other remuneration. INTL FCStone is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation

As you can see, Sean O’Connor is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean INTL FCStone Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance. The graphic below shows how CEO compensation at INTL FCStone has changed from year to year.

NasdaqGS:INTL CEO Compensation, March 23rd 2020
NasdaqGS:INTL CEO Compensation, March 23rd 2020

Is INTL FCStone Inc. Growing?

Over the last three years INTL FCStone Inc. has grown its earnings per share (EPS) by an average of 40% per year (using a line of best fit). It achieved revenue growth of 43% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don’t have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has INTL FCStone Inc. Been A Good Investment?

Given the total loss of 13% over three years, many shareholders in INTL FCStone Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared total CEO remuneration at INTL FCStone Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. This doesn’t look great when you consider CEO remuneration is up on last year. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. On another note, we’ve spotted 1 warning sign for INTL FCStone that investors should look into moving forward.

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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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