We Take A Look At Whether World Acceptance Corporation's (NASDAQ:WRLD) CEO May Be Underpaid

Shareholders will be pleased by the impressive results for World Acceptance Corporation (NASDAQ:WRLD) recently and CEO Ravin Prashad has played a key role. At the upcoming AGM on 04 August 2021, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

Check out our latest analysis for World Acceptance

How Does Total Compensation For Ravin Prashad Compare With Other Companies In The Industry?

Our data indicates that World Acceptance Corporation has a market capitalization of US$1.2b, and total annual CEO compensation was reported as US$938k for the year to March 2021. This means that the compensation hasn't changed much from last year. In particular, the salary of US$840.0k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$4.3m. In other words, World Acceptance pays its CEO lower than the industry median. Furthermore, Ravin Prashad directly owns US$27m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	US$840k	US$840k	90%
Other	US$98k	US$92k	10%
Total Compensation	US$938k	US$932k	100%

Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. World Acceptance pays out 90% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

World Acceptance Corporation's Growth

Over the past three years, World Acceptance Corporation has seen its earnings per share (EPS) grow by 32% per year. In the last year, its revenue is down 7.7%.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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 World Acceptance Corporation Been A Good Investment?

Most shareholders would probably be pleased with World Acceptance Corporation for providing a total return of 81% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for World Acceptance (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: World Acceptance 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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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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