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This article will reflect on the compensation paid to Brad Denison who has served as CEO of Fleetwood Limited (ASX:FWD) since 2014. This analysis will also assess whether Fleetwood pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Fleetwood Limited's CEO Compensation With the industry
At the time of writing, our data shows that Fleetwood Limited has a market capitalization of AU$187m, and reported total annual CEO compensation of AU$755k for the year to June 2020. We note that's a decrease of 11% compared to last year. We note that the salary portion, which stands at AU$572.9k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$272m, we found that the median total CEO compensation was AU$623k. From this we gather that Brad Denison is paid around the median for CEOs in the industry. Moreover, Brad Denison also holds AU$388k worth of Fleetwood stock directly under their own name.
Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. Although there is a difference in how total compensation is set, Fleetwood more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Fleetwood Limited's Growth Numbers
Fleetwood Limited has reduced its earnings per share by 42% a year over the last three years. It achieved revenue growth of 3.6% over the last year.
The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Fleetwood Limited Been A Good Investment?
Given the total shareholder loss of 9.8% over three years, many shareholders in Fleetwood Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Brad is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Fleetwood that investors should think about before committing capital to this stock.
Important note: Fleetwood 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.
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. 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.
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