Is Finsbury Food Group Plc (LON:FIF) Overpaying Its CEO?
In 2009, John Duffy was appointed CEO of Finsbury Food Group Plc (LON:FIF). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Finsbury Food Group
How Does John Duffy's Compensation Compare With Similar Sized Companies?
According to our data, Finsbury Food Group Plc has a market capitalization of UK£76m, and paid its CEO total annual compensation worth UK£432k over the year to June 2019. Notably, the salary of UK£420k is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under UK£162m, and the median CEO total compensation was UK£267k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Finsbury Food Group. On a sector level, around 61% of total compensation represents salary and 39% is other remuneration. Finsbury Food Group is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits.
It would therefore appear that Finsbury Food Group Plc pays John Duffy more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. The graphic below shows how CEO compensation at Finsbury Food Group has changed from year to year.
Is Finsbury Food Group Plc Growing?
Over the last three years Finsbury Food Group Plc has seen earnings per share (EPS) move in a positive direction by an average of 16% per year (using a line of best fit). In the last year, its revenue is up 8.1%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. You might want to check this free visual report on analyst forecasts for future earnings.
Has Finsbury Food Group Plc Been A Good Investment?
With a three year total loss of 39%, Finsbury Food Group Plc would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
We compared the total CEO remuneration paid by Finsbury Food Group Plc, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Shifting gears from CEO pay for a second, we've picked out 3 warning signs for Finsbury Food Group that investors should be aware of in a dynamic business environment.
Important note: Finsbury Food Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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