It's Unlikely That Jefferies Financial Group Inc.'s (NYSE:JEF) CEO Will See A Huge Pay Rise This Year

Key Insights

• Jefferies Financial Group to hold its Annual General Meeting on 28th of March
• Salary of US$1.00m is part of CEO Rich Handler's total remuneration
• Total compensation is 218% above industry average
• Jefferies Financial Group's EPS declined by 23% over the past three years while total shareholder return over the past three years was 68%

Despite strong share price growth of 68% for Jefferies Financial Group Inc. (NYSE:JEF) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 28th of March. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Jefferies Financial Group

Comparing Jefferies Financial Group Inc.'s CEO Compensation With The Industry

Our data indicates that Jefferies Financial Group Inc. has a market capitalization of US$9.5b, and total annual CEO compensation was reported as US$26m for the year to November 2023. Notably, that's a decrease of 54% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

On comparing similar companies from the American Capital Markets industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$8.2m. Hence, we can conclude that Rich Handler is remunerated higher than the industry median. Moreover, Rich Handler also holds US$835m worth of Jefferies Financial Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.0m	US$1.0m	4%
Other	US$25m	US$56m	96%
Total Compensation	US$26m	US$57m	100%

On an industry level, roughly 9% of total compensation represents salary and 91% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Jefferies Financial Group paid Rich Handler a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Jefferies Financial Group Inc.'s Growth Numbers

Over the last three years, Jefferies Financial Group Inc. has shrunk its earnings per share by 23% per year. In the last year, its revenue is down 21%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Jefferies Financial Group Inc. Been A Good Investment?

Most shareholders would probably be pleased with Jefferies Financial Group Inc. for providing a total return of 68% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Jefferies Financial Group prefers rewarding its CEO through non-salary benefits. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for Jefferies Financial Group (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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. 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.