Increases to Freightways Group Limited's (NZSE:FRW) CEO Compensation Might Cool off for now

Key Insights

• Freightways Group to hold its Annual General Meeting on 23rd of October
• Total pay for CEO Mark Troughear includes NZ$1.01m salary
• The total compensation is 181% higher than the average for the industry
• Over the past three years, Freightways Group's EPS grew by 11% and over the past three years, the total loss to shareholders 15%

As many shareholders of Freightways Group Limited (NZSE:FRW) will be aware, they have not made a gain on their investment in the past three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 23rd of October. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Freightways Group

Comparing Freightways Group Limited's CEO Compensation With The Industry

According to our data, Freightways Group Limited has a market capitalization of NZ$1.7b, and paid its CEO total annual compensation worth NZ$1.8m over the year to June 2024. This means that the compensation hasn't changed much from last year. In particular, the salary of NZ$1.01m, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the New Zealand Logistics industry with market caps ranging from NZ$659m to NZ$2.6b, we found that the median CEO total compensation was NZ$624k. This suggests that Mark Troughear is paid more than the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	NZ$1.0m	NZ$945k	58%
Other	NZ$744k	NZ$848k	42%
Total Compensation	NZ$1.8m	NZ$1.8m	100%

On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. It's interesting to note that Freightways Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Freightways Group Limited's Growth

Over the past three years, Freightways Group Limited has seen its earnings per share (EPS) grow by 11% per year. It achieved revenue growth of 7.8% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Freightways Group Limited Been A Good Investment?

With a three year total loss of 15% for the shareholders, Freightways Group Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Freightways Group that investors should think about before committing capital to this stock.

Important note: Freightways 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.