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FAT Brands Inc.'s (NASDAQ:FAT) CEO Compensation Looks Acceptable To Us And Here's Why

Under the guidance of CEO Andy Wiederhorn, FAT Brands Inc. (NASDAQ:FAT) has performed reasonably well recently. As shareholders go into the upcoming AGM on 19 October 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.

View our latest analysis for FAT Brands

How Does Total Compensation For Andy Wiederhorn Compare With Other Companies In The Industry?

Our data indicates that FAT Brands Inc. has a market capitalization of US$140m, and total annual CEO compensation was reported as US$406k for the year to December 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of US$400.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$495k. This suggests that FAT Brands remunerates its CEO largely in line with the industry average. Moreover, Andy Wiederhorn also holds US$67m worth of FAT Brands stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2020

2019

Proportion (2020)

Salary

US$400k

US$400k

99%

Other

US$5.5k

US$14k

1%

Total Compensation

US$406k

US$414k

100%

Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. FAT Brands has gone down a largely traditional route, paying Andy Wiederhorn a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at FAT Brands Inc.'s Growth Numbers

Over the last three years, FAT Brands Inc. has shrunk its earnings per share by 84% per year. In the last year, its revenue is up 32%.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 FAT Brands Inc. Been A Good Investment?

We think that the total shareholder return of 61%, over three years, would leave most FAT Brands Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Andy receives almost all of their compensation through a salary. The overall company performance has been commendable, however there are still areas for improvement. Despite robust revenue growth, until EPS growth improves, shareholders may be hesitant to increase CEO pay by too much.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 1 which can't be ignored) in FAT Brands we think you should know about.

Important note: FAT Brands 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. 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.

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

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