Stock Analysis

How Should Investors Feel About Five Below's (NASDAQ:FIVE) CEO Remuneration?

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Joel Anderson has been the CEO of Five Below, Inc. (NASDAQ:FIVE) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Five Below.

Check out our latest analysis for Five Below

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

According to our data, Five Below, Inc. has a market capitalization of US$9.1b, and paid its CEO total annual compensation worth US$6.0m over the year to February 2020. Notably, that's an increase of 8.7% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$926k.

In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$7.1m. So it looks like Five Below compensates Joel Anderson in line with the median for the industry. Moreover, Joel Anderson also holds US$42m worth of Five Below stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$926k US$815k 16%
Other US$5.0m US$4.7m 84%
Total CompensationUS$6.0m US$5.5m100%

Speaking on an industry level, nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. Five Below sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqGS:FIVE CEO Compensation December 2nd 2020

A Look at Five Below, Inc.'s Growth Numbers

Five Below, Inc.'s earnings per share (EPS) grew 6.9% per year over the last three years. Revenue was pretty flat on last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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?

We think that the total shareholder return of 153%, over three years, would leave most Five Below, Inc. shareholders smiling. 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.

To Conclude...

As we touched on above, Five Below, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the business isn't reporting great numbers in terms of EPS growth. At the same time, shareholder returns have remained strong over the same period. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer to see improved performance, before a bump in pay.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which is significant) in Five Below we think you should know about.

Switching gears from Five Below, 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.

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