We Think The Compensation For F5, Inc.'s (NASDAQ:FFIV) CEO Looks About Right

Key Insights

• F5 will host its Annual General Meeting on 14th of March
• Salary of US$962.0k is part of CEO Francois Locoh-Donou's total remuneration
• Total compensation is 35% below industry average
• F5's EPS grew by 17% over the past three years while total shareholder loss over the past three years was 1.6%

Performance at F5, Inc. (NASDAQ:FFIV) has been rather uninspiring recently and shareholders may be wondering how CEO Francois Locoh-Donou plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 14th of March. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for F5

How Does Total Compensation For Francois Locoh-Donou Compare With Other Companies In The Industry?

At the time of writing, our data shows that F5, Inc. has a market capitalization of US$11b, and reported total annual CEO compensation of US$11m for the year to September 2023. We note that's a decrease of 15% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$962k.

In comparison with other companies in the American Communications industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$17m. In other words, F5 pays its CEO lower than the industry median. What's more, Francois Locoh-Donou holds US$24m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$962k	US$925k	9%
Other	US$9.9m	US$12m	91%
Total Compensation	US$11m	US$13m	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. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

F5, Inc.'s Growth

Over the past three years, F5, Inc. has seen its earnings per share (EPS) grow by 17% per year. Its revenue is up 3.6% 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 modest revenue growth, suggesting the underlying business is healthy. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has F5, Inc. Been A Good Investment?

Given the total shareholder loss of 1.6% over three years, many shareholders in F5, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The lacklustre share price returns is rather divergent to the robust growth in EPS, suggesting that there may be other factors weighing on it apart from fundamentals. Shareholders will get the chance to question the board on key concerns and revisit their investment thesis with regards to the company.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at F5.

Important note: F5 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.