Is Prime Financial Group Limited's (ASX:PFG) CEO Pay Justified?
In 2007 Simon Madder was appointed CEO of Prime Financial Group Limited (ASX:PFG). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Prime Financial Group
How Does Simon Madder's Compensation Compare With Similar Sized Companies?
Our data indicates that Prime Financial Group Limited is worth AU$12m, and total annual CEO compensation was reported as AU$118k for the year to June 2019. It is worth noting that the CEO compensation consists almost entirely of the salary, worth AU$471k. We looked at a group of companies with market capitalizations under AU$300m, and the median CEO total compensation was AU$379k.
A first glance this seems like a real positive for shareholders, since Simon Madder is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Prime Financial Group has changed from year to year.
Is Prime Financial Group Limited Growing?
Prime Financial Group Limited has reduced its earnings per share by an average of 48% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 2.8%.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Prime Financial Group Limited Been A Good Investment?
Since shareholders would have lost about 36% over three years, some Prime Financial Group Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
It looks like Prime Financial Group Limited pays its CEO less than similar sized companies.
Shareholders should note that compensation for Simon Madder is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. Considering all these factors, we'd stop short of saying the CEO pay is too high, but we don't think shareholders would want to see a pay rise before business performance improves. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Prime Financial Group.
Important note: Prime Financial 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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