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How Should Investors Feel About Geneva Finance's (NZSE:GFL) CEO Remuneration?

David O'Connell has been the CEO of Geneva Finance Limited (NZSE:GFL) since 2008, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Geneva Finance pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Geneva Finance

Comparing Geneva Finance Limited's CEO Compensation With the industry

Our data indicates that Geneva Finance Limited has a market capitalization of NZ$30m, and total annual CEO compensation was reported as NZ$566k for the year to March 2020. We note that's a decrease of 11% compared to last year. We note that the salary portion, which stands at NZ$516.0k constitutes the majority of total compensation received by the CEO.

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In comparison with other companies in the industry with market capitalizations under NZ$300m, the reported median total CEO compensation was NZ$763k. From this we gather that David O'Connell is paid around the median for CEOs in the industry. What's more, David O'Connell holds NZ$470k worth of shares in the company in their own name.

Component

2020

2019

Proportion (2020)

Salary

NZ$516k

NZ$507k

91%

Other

NZ$50k

NZ$129k

9%

Total Compensation

NZ$566k

NZ$636k

100%

Talking in terms of the industry, salary represented approximately 49% of total compensation out of all the companies we analyzed, while other remuneration made up 51% of the pie. Geneva Finance pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

A Look at Geneva Finance Limited's Growth Numbers

Geneva Finance Limited has reduced its earnings per share by 11% a year over the last three years. It achieved revenue growth of 18% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Geneva Finance Limited Been A Good Investment?

With a three year total loss of 18% for the shareholders, Geneva Finance Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, David is compensated close to the median for companies of its size, and which belong to the same industry. Still, the company is logging healthy revenue growth over the last year. Contrarily, shareholder returns are in the red over the same stretch. EPS growth is also negative, adding insult to injury. We'd say CEO compensation isn't unfair, but shareholders may be wary of a bump in pay before the company substantially improves overall performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which is a bit unpleasant) in Geneva Finance we think you should know about.

Important note: Geneva Finance 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.