Shareholders will probably not be too impressed with the underwhelming results at Freshii Inc. (TSE:FRII) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 27 April 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.
Comparing Freshii Inc.’s CEO Compensation With the industry
Our data indicates that Freshii Inc. has a market capitalization of CA$68m, and total annual CEO compensation was reported as US$1.7m for the year to December 2020. Notably, that’s an increase of 15% over the year before. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$381k.
In comparison with other companies in the industry with market capitalizations under CA$252m, the reported median total CEO compensation was US$306k. This suggests that Matthew Corrin is paid more than the median for the industry.
Talking in terms of the industry, salary represented approximately 63% of total compensation out of all the companies we analyzed, while other remuneration made up 37% of the pie. It’s interesting to note that Freshii allocates a smaller portion of compensation to salary in comparison to the broader industry. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.
A Look at Freshii Inc.’s Growth Numbers
Over the last three years, Freshii Inc. has shrunk its earnings per share by 55% per year. In the last year, its revenue is down 38%.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
Has Freshii Inc. Been A Good Investment?
Few Freshii Inc. shareholders would feel satisfied with the return of -69% over three years. This suggests it would be unwise for the company to pay the CEO too generously.
Not only have shareholders not seen a favorable return on their investment, but the business hasn’t performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
CEO pay is simply one of the many factors that need to be considered while examining business performance.