Key Insights
The share price of Jefferies Financial Group Inc. (NYSE:JEF) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders’ minds as the AGM rolls around on 28th of March. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
See our latest analysis for Jefferies Financial Group
How Does Total Compensation For Rich Handler Compare With Other Companies In The Industry?
According to our data, Jefferies Financial Group Inc. has a market capitalization of US$9.5b, and paid its CEO total annual compensation worth US$26m over the year to November 2023. That’s a notable decrease of 54% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.
On examining similar-sized companies in the American Capital Markets industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$8.2m. Accordingly, our analysis reveals that Jefferies Financial Group Inc. pays Rich Handler north of the industry median. What’s more, Rich Handler holds US$835m 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 |
US$1.0m |
US$1.0m |
4% |
|
Other |
US$25m |
US$56m |
96% |
|
Total Compensation |
US$26m |
US$57m |
100% |
Talking in terms of the industry, salary represented approximately 9% of total compensation out of all the companies we analyzed, while other remuneration made up 91% of the pie. Investors may find it interesting that Jefferies Financial Group paid a marginal salary to Rich Handler, over the past year, focusing on non-salary compensation instead. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
Jefferies Financial Group Inc.’s Growth
Over the last three years, Jefferies Financial Group Inc. has shrunk its earnings per share by 23% per year. Its revenue is down 21% over the previous year.
The decline in EPS is a bit concerning. 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Jefferies Financial Group Inc. Been A Good Investment?
Boasting a total shareholder return of 68% over three years, Jefferies Financial Group Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude…
Jefferies Financial Group primarily uses non-salary benefits to reward its CEO. Despite the strong returns on shareholders’ investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.
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. In our study, we found 2 warning signs for Jefferies Financial Group you should be aware of, and 1 of them doesn’t sit too well with us.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.
