Increases to Finbond Group Limited's (JSE:FGL) CEO Compensation Might Cool off for now

Key Insights

• Finbond Group to hold its Annual General Meeting on 27th of October
• Total pay for CEO Willie Van Aardt includes R21.8m salary
• The total compensation is 663% higher than the average for the industry
• Finbond Group's EPS declined by 48% over the past three years while total shareholder loss over the past three years was 72%

In the past three years, the share price of Finbond Group Limited (JSE:FGL) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 27th of October will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

See our latest analysis for Finbond Group

How Does Total Compensation For Willie Van Aardt Compare With Other Companies In The Industry?

According to our data, Finbond Group Limited has a market capitalization of R278m, and paid its CEO total annual compensation worth R25m over the year to February 2023. Notably, that's an increase of 39% over the year before. Notably, the salary which is R21.8m, represents most of the total compensation being paid.

In comparison with other companies in the South Africa Consumer Finance industry with market capitalizations under R3.8b, the reported median total CEO compensation was R3.3m. Hence, we can conclude that Willie Van Aardt is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	R22m	R18m	87%
Other	R3.2m	-	13%
Total Compensation	R25m	R18m	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. It's interesting to note that Finbond Group pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Finbond Group Limited's Growth Numbers

Over the last three years, Finbond Group Limited has shrunk its earnings per share by 48% per year. It achieved revenue growth of 23% over the last year.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Finbond Group Limited Been A Good Investment?

With a total shareholder return of -72% over three years, Finbond Group Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

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. We identified 3 warning signs for Finbond Group (2 are potentially serious!) that you should be aware of before investing here.

Important note: Finbond Group 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.