We Think Shareholders Are Less Likely To Approve A Large Pay Rise For F5, Inc.'s (NASDAQ:FFIV) CEO For Now

Key Insights

• F5 to hold its Annual General Meeting on 9th of March
• CEO Francois Locoh-Donou's total compensation includes salary of US$925.0k
• Total compensation is 995% above industry average
• F5's EPS declined by 8.7% over the past three years while total shareholder return over the past three years was 21%

The share price of F5, Inc. (NASDAQ:FFIV) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 9th of March. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for F5

Comparing F5, Inc.'s CEO Compensation With The Industry

According to our data, F5, Inc. has a market capitalization of US$8.7b, and paid its CEO total annual compensation worth US$13m over the year to September 2022. Notably, that's an increase of 12% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$925k.

On examining similar-sized companies in the American Communications industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$1.2m. Accordingly, our analysis reveals that F5, Inc. pays Francois Locoh-Donou north of the industry median. Furthermore, Francois Locoh-Donou directly owns US$16m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	US$925k	US$875k	7%
Other	US$12m	US$11m	93%
Total Compensation	US$13m	US$11m	100%

On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. F5 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.

A Look at F5, Inc.'s Growth Numbers

F5, Inc. has reduced its earnings per share by 8.7% a year over the last three years. In the last year, its revenue is up 1.6%.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 F5, Inc. Been A Good Investment?

With a total shareholder return of 21% over three years, F5, Inc. shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

Whatever your view on compensation, you might want to check if insiders are buying or selling F5 shares (free trial).

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.