Here's Why Shareholders May Want To Be Cautious With Increasing Five Below, Inc.'s (NASDAQ:FIVE) CEO Pay Packet

Key Insights

• Five Below's Annual General Meeting to take place on 11th of June
• Salary of US$1.25m is part of CEO Joel Anderson's total remuneration
• Total compensation is similar to the industry average
• Five Below's EPS grew by 35% over the past three years while total shareholder loss over the past three years was 28%

The underwhelming share price performance of Five Below, Inc. (NASDAQ:FIVE) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 11th of June could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Five Below

How Does Total Compensation For Joel Anderson Compare With Other Companies In The Industry?

At the time of writing, our data shows that Five Below, Inc. has a market capitalization of US$7.6b, and reported total annual CEO compensation of US$10m for the year to February 2024. Notably, that's an increase of 45% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.3m.

On examining similar-sized companies in the American Specialty Retail industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$11m. From this we gather that Joel Anderson is paid around the median for CEOs in the industry. Moreover, Joel Anderson also holds US$36m worth of Five Below stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	US$1.3m	US$1.2m	12%
Other	US$8.9m	US$5.8m	88%
Total Compensation	US$10m	US$7.0m	100%

Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. Five Below sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Five Below, Inc.'s Growth

Five Below, Inc. has seen its earnings per share (EPS) increase by 35% a year over the past three years. Its revenue is up 15% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Five Below, Inc. Been A Good Investment?

Since shareholders would have lost about 28% over three years, some Five Below, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Five Below.

Important note: Five Below 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. 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.