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Is Data#3 Limited's (ASX:DTL) CEO Salary Justified?

In 2014, Laurence Baynham was appointed CEO of Data#3 Limited (ASX:DTL). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Data#3

How Does Laurence Baynham's Compensation Compare With Similar Sized Companies?

According to our data, Data#3 Limited has a market capitalization of AU$667m, and paid its CEO total annual compensation worth AU$1.1m over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$515k. When we examined a selection of companies with market caps ranging from AU$306m to AU$1.2b, we found the median CEO total compensation was AU$1.2m.

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Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. It's interesting to note that Data#3 allocates a smaller portion of compensation to salary in comparison to the broader industry.

So Laurence Baynham is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. The graphic below shows how CEO compensation at Data#3 has changed from year to year.

ASX:DTL CEO Compensation May 11th 2020
ASX:DTL CEO Compensation May 11th 2020

Is Data#3 Limited Growing?

On average over the last three years, Data#3 Limited has seen earnings per share (EPS) move in a favourable direction by 12% each year (using a line of best fit). It achieved revenue growth of 17% over the last year.

This demonstrates that the company has been improving recently. A good result. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. It could be important to check this free visual depiction of what analysts expect for the future.

Has Data#3 Limited Been A Good Investment?

Most shareholders would probably be pleased with Data#3 Limited for providing a total return of 200% over three years. 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...

Laurence Baynham is paid around what is normal for the leaders of comparable size companies.

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. Moving away from CEO compensation for the moment, we've identified 1 warning sign for Data#3 that you should be aware of before investing.

Important note: Data#3 may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.