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Is Freedom Foods Group Limited's (ASX:FNP) CEO Overpaid Relative To Its Peers?

Simply Wall St

Rory J. Macleod became the CEO of Freedom Foods Group Limited (ASX:FNP) in 2012. 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. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Freedom Foods Group

How Does Rory J. Macleod's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Freedom Foods Group Limited has a market cap of AU$1.4b, and reported total annual CEO compensation of AU$2.5m for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$531k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from AU$575m to AU$2.3b, we found the median CEO total compensation was AU$1.4m.

As you can see, Rory J. Macleod is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Freedom Foods Group Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Freedom Foods Group has changed from year to year.

ASX:FNP CEO Compensation, January 6th 2020

Is Freedom Foods Group Limited Growing?

Freedom Foods Group Limited has reduced its earnings per share by an average of 68% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 35%.

As investors, we are a bit wary of companies that have lower earnings per share, over three years. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has Freedom Foods Group Limited Been A Good Investment?

Freedom Foods Group Limited has generated a total shareholder return of 17% over three years, so most shareholders would 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...

We compared the total CEO remuneration paid by Freedom Foods Group Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Freedom Foods Group.

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

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.