Shareholders May Not Be So Generous With Prospa Group Limited's (ASX:PGL) CEO Compensation And Here's Why
Key Insights
Prospa Group to hold its Annual General Meeting on 15th of November
Salary of AU$540.3k is part of CEO Greg Moshal's total remuneration
The total compensation is similar to the average for the industry
Prospa Group's three-year loss to shareholders was 64% while its EPS grew by 16% over the past three years
In the past three years, the share price of Prospa Group Limited (ASX:PGL) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 15th of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
View our latest analysis for Prospa Group
How Does Total Compensation For Greg Moshal Compare With Other Companies In The Industry?
At the time of writing, our data shows that Prospa Group Limited has a market capitalization of AU$47m, and reported total annual CEO compensation of AU$767k for the year to June 2023. We note that's a decrease of 15% compared to last year. In particular, the salary of AU$540.3k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the Australian Consumer Finance industry with market capitalizations under AU$313m, the reported median total CEO compensation was AU$771k. From this we gather that Greg Moshal is paid around the median for CEOs in the industry. What's more, Greg Moshal holds AU$7.2m 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 | AU$540k | AU$512k | 70% |
Other | AU$227k | AU$394k | 30% |
Total Compensation | AU$767k | AU$905k | 100% |
Speaking on an industry level, nearly 55% of total compensation represents salary, while the remainder of 45% is other remuneration. Prospa Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Prospa Group Limited's Growth
Prospa Group Limited's earnings per share (EPS) grew 16% per year over the last three years. Its revenue is up 22% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Prospa Group Limited Been A Good Investment?
The return of -64% over three years would not have pleased Prospa Group Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Prospa Group that you should be aware of before investing.
Important note: Prospa 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.
